03:00 Fri 28 Sep 2018
Amphion Innovations - Half-year Report
("Amphion" or the "Company")
Half Year Report
Interim results for the six months to
Financial Results
· Net Asset Value ("NAV") decreased when compared to the previous year end, being
US -
· Revenue decreased to US
· Administrative expenses decreased to US
· Loss before taxation was US -$5.92 million (H1 2017: US $1.68 million) after fair value loss on the holding of Motif Bio plc
Highlights
Amphion
· In March, the holders of the Convertible Promissory Notes 2008 - 2017 voted to extend repayment of the Notes to
· In May, Amphion sold 8,896,034 shares of Motif Bio for total proceeds of US
· In June, Mr.
Motif Bio
· Motif Bio raised an additional
· In June, Motif Bio submitted its New Drug Application ("NDA") for its lead product iclaprim and in August the FDA notified the company that its filing was sufficiently complete to perform a substantive review
Polarean
· Successful IPO of
Post Period Events
· In September, Mr.
· In September, Amphion reached an agreement in principle, subject to entering into binding agreement, to extend the repayment of the loan Facility until
· In August, Amphion sold 3,000,000 shares of Motif Bio for net proceeds of US
· In August, Motif Bio received a Notice of Allowance from the
· In August, Polarean announced that the first patient has been enrolled in its Phase III FDA clinical trial which aims to demonstrate non-inferiority of its drug-device technology combination, using hyperpolarised 129-Xenon (129Xe) gas MRI, against an approved comparator
· In July, Polarean announced the successful placing of ordinary shares, raising
*Exchange rate at
With regards to Motif Bio, despite a slight delay in filing the NDA for the antibiotic iclaprim used to treat bacterial skin infections, Motif continued to make steady progress in preparation of the NDA and completed the filing and application in
In addition to continued support for both Motif Bio and Polarean, subject to the availability of working capital, we are planning to put additional resources behind the further development of FireStar. Our goal is to have FireStar in a position for an IPO in 2019 and look forward to being able to update the market with additional progress."
This announcement contains insider information for the purposes of Article 7 of Regulatory (EU) No596/2014.
For further information please contact:
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Tel: +1 (212) 210 6224 |
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Tel: +44 (0)20 7886 2500 |
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Tel: +44 (0)20 3861 6625 |
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Walbrook PR |
Tel: +44 (0)20 7933 8780 or amphion@walbrookpr.com |
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About
Chief Executive Officer's Statement
Partner Company Summaries
Motif Bio
Motif Bio has continued to make good progress and we are pleased to note that this culminated in Motif Bio making a NDA FDA submission for iclaprim on
Polarean Imaging
Polarean is a medical drug-device combination company operating in the high resolution medical imaging market. The company has been selling pre-clinical systems to leading institutional research facilities for the last two years and is now, following the IPO, embarked on the pivotal clinical trials designed to get marketing approval from the FDA for sales of clinical systems to hospitals and clinics.
The Polarean IPO was the only life-science listing on AIM in the first six months of 2018. Polarean raised a total of US
We continue to actively assist FireStar in the further development of its new business plan. The technology platform on which the product offering is being built is robust and protected by six issued patents. The product is being designed to give the sponsors of outsourced clinical trials an efficient and economical window in real time into the key performance indicators that all sponsors need to see at the earliest possible moment. The costs of drug development are very large and significant opportunity exists to save both money and time in trials by getting better data in front of the key decision makers at the sponsor at the earliest possible moment. Clinical data in trials is gathered in countless different formats and FireStar's proprietary technology can play an important role in synthesising and translating those data flows into comprehensible and actionable signals, in real time. The need is large and the value to the sponsor is very high. We have at least another six months to a year of further development of the system before it can begin to be beta tested by the customers, but early interaction with industry players encourages us to believe this programme should be successful. Currently, Amphion's holding in FireStar is in the form of loans (advances and amounts owed for advisory fees) and equity that reflect the continued financial support we have given to the company over many years. Ahead of any IPO, Amphion's ownership is typically in the 30% - 50% range and we are confident that our FireStar holding will reflect that by the time we complete the expected equity financing rounds.
DataTern's efforts, announced in our full year 2017 results, to progress its claims in the
WellGen
Through its joint venture with a US-based sports drink company, WellGen began marketing Workout Tea, a novel functional beverage based on a patented anti-inflammatory ingredient. The market for such products has been expanding rapidly in recent years and WellGen believes there is a place for a tea-based sports drink whose anti-inflammatory properties have been clinically proven. WellGen has determined that its interest in the marketing of Workout Tea will be through a profit participation in the activities of its joint venture partner. The profit participation agreement is currently being negotiated.
Financial review
Revenue in the six months to
In prior years, the Group has been able to meet its working capital and investment obligations through fund raising including the issue of shares, convertible promissory notes ("CPNs") and promissory notes, from revenue generated through the provision of advisory services to its Partner Companies, from the revenue generated from the licensing of intellectual property, and through a secured loan facility. As a result of a lack of cash being generated from these activities during 2018, the Group has had to reduce its financial support to its Partner Companies and extend the payment dates for its trade payables and its convertible and non-convertible promissory notes. As the Company has been able to reach accommodations with these debt holders in the past we are confident that, if required, we will be able to reach agreement to extend the maturity of the debt. The Group has also reduced its operating costs where possible, including salary and fee reductions for employees and directors, and has obtained financial support from various related parties, through the issue of promissory notes, short-term loans, and through a secured loan facility. The Group will need to continue to implement these measures and seek further financing as required. The Group's primary method of financing during 2018 has been through a second loan facility (the "Facility"), using its holdings in Motif Bio as security. Since
The timing and ability of the Group to realise its investments in Partner Companies is subject to inherent uncertainty due to numerous factors including, but not limited to: the liquidity of the investment; market conditions being favourable for realisation whether through a listing or otherwise; potential for restrictions being imposed that may limit full realisation of investments sold; such as lock-in periods; and other factors that are outside the control of the Group. The Group will realise investments where the terms of any potential arrangement are favourable to the Group and is confident of its ability to fund near term cash requirements through this process if required.
In
At period end, the Company also has approximately US
Outlook
Despite the setback to the Motif Bio share price, as well as the static hold of the Polarean share price, we continue to believe that both are drastically undervalued. Comparable drug development companies with a drug that has completed a Phase III trial and submitted an NDA to the FDA have, typically, been substantially higher than the current market capitalisation of Motif Bio. We continue to actively support the development of both companies and view the future of both companies with optimism and excitement. We are now beginning to focus our efforts to develop FireStar and its product platform with the goal of an IPO for the company in 2019.
We have recently had occasion to begin to look beyond the horizon defined by the projects already underway, as described above. We remain very actively supportive of each of them but recognise the need to identify extensions to our business model that can provide the next wave of opportunity for our shareholders. We see that most likely being in the space between the private financing activities that support emerging life science and med-tech companies and the public markets where they can access a deeper pool of capital.
We look forward to reporting further on this topic in coming months. Meanwhile our efforts remain focused on doing everything we can to support Motif Bio and Polarean on the public markets and to help FireStar progress to the point where it can graduate to the next level both commercially and financially.
Chief Executive Officer
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Condensed consolidated statement of comprehensive income |
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For the six months ended |
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Unaudited |
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Unaudited |
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Notes |
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Six months |
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Six months |
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Audited |
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ended |
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ended |
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Year ended |
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Continuing operations |
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US $ |
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US $ |
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US $ |
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Revenue |
4 |
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60,000 |
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153,000 |
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286,367 |
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Administrative expenses |
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(1,369,466) |
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(1,752,817) |
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(3,150,011) |
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Operating loss |
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(1,309,466) |
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(1,599,817) |
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(2,863,644) |
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Fair value (losses)/gains on investments |
8 |
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(5,494,003) |
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4,277,373 |
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9,956,222 |
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Realised gains/(losses) on sale of investments |
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1,478,471 |
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(485,170) |
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(3,173,012) |
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Interest income |
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328 |
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155,868 |
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314,394 |
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Other gains and losses |
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217,139 |
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33,201 |
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(308,093) |
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Finance costs |
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(817,217) |
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(696,601) |
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(1,425,359) |
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(Loss)/profit before tax |
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(5,924,748) |
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1,684,854 |
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2,500,508 |
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Tax on profit/(loss) |
6 |
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96 |
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- |
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(719) |
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(Loss)/profit for the period |
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(5,924,652) |
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1,684,854 |
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2,499,789 |
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Other comprehensive income |
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Other comprehensive income/(loss) for the period |
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- |
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- |
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- |
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Total comprehensive (loss)/income for the period |
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(5,924,652) |
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1,684,854 |
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2,499,789 |
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The Directors consider that all results derive from continuing activities. |
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(Loss)/earnings per share |
7 |
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Basic |
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US |
$ (0.03) |
US |
$ 0.01 |
US |
$ 0.01 |
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Diluted |
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US |
$ (0.03) |
US |
$ 0.01 |
US |
$ 0.01 |
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The notes are an integral part of these financial statements.
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Condensed consolidated statement of financial position |
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As at |
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Unaudited |
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Unaudited |
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Audited |
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Notes |
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US $ |
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US $ |
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US $ |
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Non-current assets |
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Intangible assets |
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- |
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42,390 |
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- |
Security deposit |
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16,000 |
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20,000 |
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16,000 |
Investments |
8 |
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19,065,659 |
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25,314,069 |
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26,092,767 |
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19,081,659 |
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25,376,459 |
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26,108,767 |
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Current assets |
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Prepaid expenses and other receivables |
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1,147,167 |
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1,178,621 |
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1,157,146 |
Cash and cash equivalents |
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141,384 |
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705,601 |
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1,035,201 |
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1,288,551 |
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1,884,222 |
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2,192,347 |
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Total assets |
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20,370,210 |
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27,260,681 |
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28,301,114 |
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Current liabilities |
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Trade and other payables |
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10,714,011 |
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9,872,969 |
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10,478,036 |
Notes payable |
10 |
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10,305,673 |
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13,440,632 |
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12,522,232 |
Convertible promissory notes |
10 |
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8,033,786 |
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7,765,923 |
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8,108,264 |
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29,053,470 |
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31,079,524 |
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31,108,532 |
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Total liabilities |
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29,053,470 |
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31,079,524 |
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31,108,532 |
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Net liabilities |
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(8,683,260) |
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(3,818,843) |
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(2,807,418) |
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Equity |
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Share capital |
11 |
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3,626,128 |
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3,593,032 |
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3,615,284 |
Share premium account |
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39,062,508 |
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38,897,769 |
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39,053,530 |
Retained earnings |
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(51,371,896) |
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(46,309,644) |
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(45,476,232) |
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Total equity |
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(8,683,260) |
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(3,818,843) |
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(2,807,418) |
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The notes are an integral part of these financial statements.
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Condensed consolidated statement of changes in equity |
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For the six months ended |
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Unaudited |
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Share |
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Share |
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premium |
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Retained |
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Notes |
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capital |
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account |
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earnings |
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Total |
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US $ |
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US $ |
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US $ |
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US $ |
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Balance at |
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3,465,082 |
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38,677,056 |
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(48,028,519) |
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(5,886,381) |
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Profit for the period |
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- |
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- |
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1,684,854 |
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1,684,854 |
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Total comprehensive income for the period |
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- |
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- |
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1,684,854 |
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1,684,854 |
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Issue of share capital |
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127,950 |
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220,713 |
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- |
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348,663 |
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Recognition of share-based payments |
12 |
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- |
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- |
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34,021 |
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34,021 |
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Balance at |
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3,593,032 |
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38,897,769 |
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(46,309,644) |
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(3,818,843) |
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Balance at |
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3,615,284 |
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39,053,530 |
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(45,476,232) |
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(2,807,418) |
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Loss for the period |
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- |
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- |
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(5,924,652) |
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(5,924,652) |
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Total comprehensive loss for the period |
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- |
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- |
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(5,924,652) |
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(5,924,652) |
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Issue of share capital |
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10,844 |
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8,978 |
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- |
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19,822 |
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Recognition of share-based payments |
12 |
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- |
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- |
|
28,988 |
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28,988 |
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Balance at 30 June 2018 |
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3,626,128 |
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39,062,508 |
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(51,371,896) |
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(8,683,260) |
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Amphion Innovations plc |
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Condensed consolidated cash flow statement |
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For the six months ended 30 June 2018 |
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Unaudited |
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Unaudited |
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|
Six months |
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Six months |
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Audited |
|
ended |
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ended |
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Year ended |
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30 June 2018 |
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30 June 2017 |
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31 December 2017 |
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US $ |
|
US $ |
|
US $ |
Operating activities |
|
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(Loss)/profit |
(5,924,652) |
|
1,684,854 |
|
2,499,789 |
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Adjustments for: |
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Amortisation of intangible assets |
- |
|
77,542 |
|
119,932 |
Recognition of share-based payments |
48,810 |
|
34,021 |
|
52,498 |
Change in fair value of investments |
5,494,003 |
|
(4,277,373) |
|
(9,956,222) |
(Gain)/loss on sale of investments |
(1,478,471) |
|
485,170 |
|
3,173,012 |
Issue notes to settle interest expense |
205,617 |
|
184,983 |
|
383,436 |
Issue ordinary shares to settle finance fee |
- |
|
348,664 |
|
348,664 |
Transaction costs |
307,044 |
|
- |
|
- |
(Gain)/loss from change in foreign exchange rate on |
|
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|
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|
convertible promissory notes |
(204,131) |
|
389,956 |
|
712,322 |
Other income |
- |
|
(4,338) |
|
(4,338) |
Decrease in security deposit |
- |
|
- |
|
4,000 |
(Increase)/decrease in prepaid & other receivables |
9,979 |
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(28,003) |
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(6,527) |
Increase/(decrease) in trade & other payables |
235,975 |
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(275,384) |
|
329,683 |
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Net cash used in operating activities |
(1,305,826) |
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(1,379,908) |
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(2,343,751) |
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Investing activities |
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Purchases of investments |
(642,137) |
|
(461,278) |
|
(543,361) |
Proceeds from disposition of investment |
3,653,712 |
|
1,783,736 |
|
4,078,128 |
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Net cash provided by investing activities |
3,011,575 |
|
1,322,458 |
|
3,534,767 |
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Financing activities |
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Proceeds on issue of promissory notes |
- |
|
2,050,000 |
|
3,007,964 |
Repayments of promissory notes |
(2,599,566) |
|
(1,600,775) |
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(3,477,605) |
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Net cash (used in)/from financing activities |
(2,599,566) |
|
449,225 |
|
(469,641) |
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Net (decrease)/increase in cash and cash equivalents |
(893,817) |
|
391,775 |
|
721,375 |
|
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|
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|
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Cash and cash equivalents at the beginning of the period |
1,035,201 |
|
313,826 |
|
313,826 |
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
141,384 |
|
705,601 |
|
1,035,201 |
|
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Interest received |
328 |
|
12 |
|
98 |
Interest paid |
264,216 |
|
230,705 |
|
374,379 |
Notes to the condensed consolidated interim financial statements
1. General information
The condensed consolidated interim financial statements for the six months ended 30 June 2018 are unaudited and do not constitute statutory accounts within the meaning of the Isle of Man Companies Act 2006. The statutory accounts of Amphion Innovations plc for the year ended 31 December 2017 have been filed with the Registrar of Companies and contain an unqualified audit report which includes an emphasis of matter relating to significant uncertainty in respect of going concern and valuation of Partner Company investments. Copies are available on the Company's website at www.amphionplc.com/reports.php.
2. Accounting policies
These condensed consolidated interim financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted by the EU (IFRS).
The accounting policies applied by the Group are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2017. None of the new standards that have become effective in the period are expected to have a material effect on the Group's financial statements.
Going concern
After making inquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. In prior years, the Group has been able to meet its working capital and investment obligations through fund raising including the issue of shares, convertible promissory notes ("CPNs") and promissory notes, from revenue generated through the provision of advisory services to its Partner Companies, from the revenue generated from the licensing of intellectual property, and through a secured loan facility. As a result of a lack of cash being generated from these activities during 2018, the Group has had to reduce its financial support to its Partner Companies, sell shares in its listed Partner Companies, and extend the payment dates for its trade payables and its convertible and non-convertible promissory notes. As the Company has been able to reach accommodations with these debt holders in the past, we believe that, if required, we will be able to reach agreement to extend the maturity of the debt. In addition, the Company is currently working with the Facility lender and looking at alternative lenders in an attempt to extend the maturity date of the Facility and obtain additional leverage. For these reasons, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.
3. Use of judgements and estimates
The preparation of the Group's interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingencies at the date of the Group's interim financial statements, and revenue and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates in the Group's financial statements include the amounts recorded for the fair value of the financial instruments and other receivables. By their nature, these estimates and assumptions are subject to an inherent measurement of uncertainty and the effect on the Group's financial statements of changes in estimates in future periods could be significant.
Investments that are fair valued through profit or loss, as detailed in note 8, are all considered to be "Partner Companies". Those "Partner Companies" categorised as Level 3 are defined as investment in "Private Companies".
3. Use of judgements and estimates, (continued)
Fair value of financial instruments
The Directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market ("Private Investments"). The estimation of fair value of these Private Investments includes a number of assumptions which are not supported by observable market inputs. The carrying amount of the Private Investments is US $2.6 million.
Fair value of other receivables
Other receivables are stated at their amortised cost which approximates their fair value and are reduced by appropriate allowances for estimated irrecoverable amounts and do not carry any interest.
4. Revenue
An analysis of the Group's revenue is as follows:
|
Six months ended |
|
Six months ended |
|
Year ended |
|
30 June 2018 |
|
30 June 2017 |
|
31 December 2017 |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
Advisory fees |
60,000 |
|
153,000 |
|
286,367 |
License fees |
- |
|
- |
|
- |
|
|
|
|
|
|
|
60,000 |
|
153,000 |
|
286,367 |
As part of the agreement for DataTern, Inc. to purchase certain of the intangible assets in December 2007, a portion of future revenues from these patents will be retained by FireStar Software, Inc. No amounts have become payable to FireStar Software, Inc. to date.
5. Segment information
For management purposes, the Group is currently organised into three business segments - advisory services, investing activities, and intellectual property. These business segments are the basis on which the Group reports its primary segment information.
Information regarding these segments is presented below.
|
|
|
Advisory |
|
Investing |
|
Intellectual |
|
|
|
|
|
|
|
services |
|
activities |
|
property |
|
Eliminations |
|
Consolidated |
|
|
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
30 June 2018 |
|
30 June 2018 |
|
30 June 2018 |
|
30 June 2018 |
|
30 June 2018 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
External advisory fees |
|
60,000 |
|
- |
|
- |
|
- |
|
60,000 |
|
External license fees |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Total revenue |
|
60,000 |
|
- |
|
- |
|
- |
|
60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses |
|
(417,109) |
|
(857,395) |
|
(94,962) |
|
- |
|
(1,369,466) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
(357,109) |
|
(857,395) |
|
(94,962) |
|
- |
|
(1,309,466) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value losses on |
|
|
|
|
|
|
|
|
|||
investments |
|
- |
|
(5,532,910) |
|
- |
|
38,907 |
|
(5,494,003) |
|
Realized gain on sale |
|
|
|
|
|
|
|
|
|
|
|
of investments |
|
- |
|
1,478,471 |
|
- |
|
- |
|
1,478,471 |
|
Interest income |
|
- |
|
328 |
|
- |
|
- |
|
328 |
|
Other gains and losses |
|
- |
|
217,139 |
|
- |
|
- |
|
217,139 |
|
Finance costs |
|
- |
|
(795,568) |
|
(21,649) |
|
- |
|
(817,217) |
|
Profit/(loss) before tax |
|
(357,109) |
|
(5,489,935) |
|
(116,611) |
|
38,907 |
|
(5,924,748) |
|
Income taxes |
|
96 |
|
- |
|
- |
|
- |
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after tax |
|
(357,013) |
|
(5,489,935) |
|
(116,611) |
|
38,907 |
|
(5,924,652) |
|
|
|
Advisory |
|
Investing |
|
Intellectual |
|
|
|
|
|
|
|
services |
|
activities |
|
property |
|
Eliminations |
|
Consolidated |
|
|
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
30 June 2018 |
|
30 June 2018 |
|
30 June 2018 |
|
30 June 2018 |
|
30 June 2018 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
2,348,107 |
|
29,545,063 |
|
30,909 |
|
(11,553,869) |
|
20,370,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
9,266,200 |
|
22,826,489 |
|
7,938,769 |
|
(10,977,988) |
|
29,053,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation |
- |
|
- |
|
- |
|
- |
|
- |
||
|
|
|
|
|
|
|
|
|
|
||
Recognition of share-based |
|
|
|
|
|
|
|
|
|
||
payments |
|
- |
|
48,810 |
|
- |
|
- |
|
48,810 |
5. Segment information, (continued)
For management purposes for 30 June 2017, the Group was organised into three business segments - advisory services, investing activities, and intellectual property.
|
|
|
Advisory |
|
Investing |
|
Intellectual |
|
|
|
|
|
|
|
services |
|
activities |
|
property |
|
Eliminations |
|
Consolidated |
|
|
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
30 June 2017 |
|
30 June 2017 |
|
30 June 2017 |
|
30 June 2017 |
|
30 June 2017 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
External advisory fees |
|
153,000 |
|
- |
|
- |
|
- |
|
153,000 |
|
External license fees |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Total revenue |
|
153,000 |
|
- |
|
- |
|
- |
|
153,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses |
|
(331,499) |
|
(1,077,680) |
|
(343,638) |
|
- |
|
(1,752,817) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
(178,499) |
|
(1,077,680) |
|
(343,638) |
|
- |
|
(1,599,817) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value gains on |
|
|
|
|
|
|
|
|
|||
investments |
|
- |
|
4,308,957 |
|
- |
|
(31,584) |
|
4,277,373 |
|
Realized loss on sale |
|
|
|
|
|
|
|
|
|
|
|
of investments |
|
- |
|
(485,170) |
|
- |
|
- |
|
(485,170) |
|
Interest income |
|
- |
|
155,868 |
|
- |
|
- |
|
155,868 |
|
Other gains and losses |
|
- |
|
(407,664) |
|
440,865 |
|
- |
|
33,201 |
|
Finance costs |
|
- |
|
(660,961) |
|
(35,640) |
|
- |
|
(696,601) |
|
Profit/(loss) before tax |
|
(178,499) |
|
1,833,350 |
|
61,587 |
|
(31,584) |
|
1,684,854 |
|
Income taxes |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after tax |
|
(178,499) |
|
1,833,350 |
|
61,587 |
|
(31,584) |
|
1,684,854 |
|
|
|
Advisory |
|
Investing |
|
Intellectual |
|
|
|
|
|
|
|
services |
|
activities |
|
property |
|
Eliminations |
|
Consolidated |
|
|
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
Six months |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
30 June 2017 |
|
30 June 2017 |
|
30 June 2017 |
|
30 June 2017 |
|
30 June 2017 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
2,150,523 |
|
35,418,672 |
|
74,316 |
|
(10,382,830) |
|
27,260,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
8,500,757 |
|
24,878,056 |
|
7,526,804 |
|
(9,826,093) |
|
31,079,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation |
- |
|
- |
|
77,542 |
|
- |
|
77,542 |
||
|
|
|
|
|
|
|
|
|
|
||
Recognition of share-based |
|
|
|
|
|
|
|
|
|
||
payments |
|
- |
|
34,021 |
|
- |
|
- |
|
34,021 |
5. Segment information, (continued)
Geographical segments
The Group's operations are located in the United States and the United Kingdom.
The following table provides an analysis of the Group's advisory fees by geographical location of the investment.
|
|
Advisory fees by |
||
|
|
geographical location |
||
|
|
Six months ended |
|
Six months ended |
|
|
30 June 2018 |
|
30 June 2017 |
|
|
US $ |
|
US $ |
|
|
|
|
|
United States |
|
- |
|
- |
United Kingdom |
|
60,000 |
|
153,000 |
|
|
60,000 |
|
153,000 |
The following table provides an analysis of the Group's license fees by geographical location.
|
License fees by |
|
|
geographical location |
|
|
Six months ended |
Six months ended |
|
30 June 2018 |
30 June 2017 |
|
US $ |
US $ |
United States |
- |
- |
Europe |
- |
- |
|
- |
- |
The following is an analysis of the carrying amount of segment assets, and additions to fixtures, fittings, and equipment, analysed by the geographical area in which the assets are located:
|
Carrying amount |
|
Additions to fixtures, fittings, and |
||||
|
of segment assets |
|
equipment and intangible assets |
||||
|
Six months ended |
|
Six months ended |
|
Six months ended |
|
Six months ended |
|
30 June 2018 |
|
30 June 2017 |
|
30 June 2018 |
|
30 June 2017 |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
United States |
3,913,443 |
|
10,252,395 |
|
- |
|
- |
United Kingdom |
16,456,767 |
|
17,008,286 |
|
- |
|
- |
|
20,370,210 |
|
27,260,681 |
|
- |
|
- |
6. Income tax expense
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
From 6 April 2006, a standard rate of corporate income tax of 0% applies to Isle of Man companies, with exceptions taxable at the 10% rate, namely licensed banks in respect of deposit-taking business, companies that profit from land and property in the Isle of Man and companies that elect to pay tax at the 10% rate. No provision for Isle of Man taxation is therefore required. The Company is treated as a Partnership for U.S. federal and state income tax purposes and, accordingly, its income or loss is taxable directly to its partners.
The Company has three subsidiaries, two in the USA and one in the Kingdom of Bahrain. The US subsidiaries, Amphion Innovations US Inc. and DataTern, Inc., are Corporations and therefore taxed directly. The US subsidiaries suffer US federal tax, state tax, and New York City tax on their taxable net income.
The Group charge for the period can be reconciled to the profit per the consolidated income statement as follows:
|
US $ |
|
|
Loss before tax |
(5,924,748) |
|
|
Tax at the Isle of Man income tax rate of 0% |
- |
|
|
Effect of different tax rates of subsidiaries |
|
operating in other jurisdictions |
(96) |
|
|
Current tax/(refund) |
(96) |
7. Earnings per share
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data:
Earnings |
Six months ended |
|
Six months ended |
|
Year ended |
|
30 June 2018 |
|
30 June 2017 |
|
31 December 2017 |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
Profit/(loss) for the purposes of basic and diluted earnings per share |
(5,924,652) |
|
1,684,854 |
|
2,499,789 |
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares |
|
|
|
|
|
|
Six months |
|
Six months |
|
|
|
ended |
|
ended |
|
Year ended |
|
30 June 2018 |
|
30 June 2017 |
|
31 December 2017 |
|
|
|
|
|
|
Weighted average number of ordinary shares for |
|
|
|
|
|
the purposes of basic earnings per share |
209,904,770 |
|
199,500,179 |
|
203,648,083 |
|
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
Options |
- |
|
1,511,227 |
|
1,002 |
Convertible promissory notes |
202,919,502 |
|
74,701,069 |
|
74,915,585 |
|
|
|
|
|
|
Weighted average number of ordinary shares for |
|
|
|
|
|
the purposes of diluted earnings per share |
412,824,272 |
|
275,712,475 |
|
278,564,670 |
Share options that could potentially dilute basic earnings per share have been excluded from the computation of diluted earnings per share in 2018 because they would be antidilutive.
8. Investments
At fair value through profit or loss
|
Group |
|||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
US $ |
US $ |
US $ |
US $ |
At 1 January 2018 |
20,615,470 |
- |
5,477,297 |
26,092,767 |
|
|
|
|
|
Investments during the year |
573,376 |
- |
68,761 |
642,137 |
Transfers between levels |
2,876,579 |
|
(2,876,579) |
- |
Disposals |
(3,653,712) |
- |
- |
(3,653,712) |
Fair value losses |
(3,946,772) |
- |
(68,761) |
(4,015,533) |
|
|
|
|
|
At 30 June 2018 |
16,464,941 |
- |
2,600,718 |
19,065,659 |
|
|
|
|
|
At 1 January 2017 |
14,918,606 |
- |
7,925,718 |
22,844,324 |
|
|
|
|
|
Investments during the year |
- |
- |
461,278 |
461,278 |
Disposals |
(1,783,736) |
- |
- |
(1,783,736) |
Fair value gains/(losses) |
3,873,417 |
- |
(81,214) |
3,792,203 |
|
|
|
|
|
At 30 June 2017 |
17,008,287 |
- |
8,305,782 |
25,314,069 |
The Group is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. In the case of the Group, investments classified as Level 1 have been valued based on a quoted price in an active market. Investments classified as Level 2 have been valued using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Fair values of unquoted investments classified as Level 3 in the fair value hierarchy have been determined in part or in full by valuation techniques that are not supported by observable market prices or rates. Investment valuations for Level 3 investments have been arrived at using a variety of valuation techniques and assumptions. For instances where the fair values are based upon the most recent market transaction but which occurred more than twelve months previously, the investments are classified as Level 3 in the fair value hierarchy.
The net decrease in fair value for the six months ended 30 June 2018 of US $4,015,533 includes a net decrease of US $5,425,242 from the change in value of the public companies and is based on quoted prices in active markets, a realized gain of US $1,478,471 from the sale of Motif Bio plc and a net decrease of US $68,761 in Level 3 investments that has been estimated using valuation techniques in accordance with the International Private Equity and Venture Capital Valuation Guidelines.
During 2018, securities with a carrying value of US $2,876,579 at 31 December 2017 were transferred from Level 3 to Level 1 because the securities were listed on the AIM of the London Stock Exchange in 2018 and they are currently actively traded in that market. The securities now have a published price quotation in an active market.
8. Investments, (continued)
The 2018 disposals include the sale of 8,896,034 Motif Bio plc ordinary shares for US $3,653,712 that was used to pay monthly payments to the institutional lender.
Fair value determination
The Directors have valued the investments in accordance with the guidance laid down in the International Private Equity and Venture Capital Valuation Guidelines. The inputs used to derive the investment valuations are based on estimates and judgements made by management which are subject to inherent uncertainty. As such the carrying value in the financial statements at 30 June 2018 may differ materially from the amount that could be realised in an orderly transaction between willing market participants on the reporting date.
In making their assessment of fair value at 30 June 2018, management has considered the total exposure to each entity including equity, warrants, options, promissory notes, and receivables.
Further information in relation to the directly held private investment portfolio that are at Level 3 at 30 June 2018 is set out below:
|
Fair value |
Methodology |
Unobservable inputs |
|
US $ |
|
|
Private investments |
2,600,718 |
Multiple methods used in combination including: Discount to last market price, discount to last financing round, price of future financing round, third party valuation, and valuation of planned transaction. |
Discount (0%-100%), price of fund raising. |
Given the range of techniques and inputs used in the valuation process and the fact that in most cases more than one approach is used, a sensitivity analysis is not considered to be a practical or meaningful disclosure. It should be noted however that increases or decreases in any of the inputs listed above in isolation may result in higher or lower fair value measurements.
9. Other financial assets and liabilities
The carrying amounts of the Group's financial assets and financial liabilities at the statement of financial position date are as follows.
|
|
|||
|
30 June 2018 |
31 December 2017 |
||
|
Carrying |
Fair |
Carrying |
Fair |
|
amount |
value |
amount |
value |
|
US $ |
US $ |
US $ |
US $ |
Financial assets |
|
|
|
|
Fair value through profit or loss |
|
|
|
|
Investments - designated |
|
|
|
|
as such upon initial recognition |
19,065,659 |
19,065,659 |
26,092,767 |
26,092,767 |
Current assets |
|
|
|
|
Loans and receivables |
|
|
|
|
Security deposit |
16,000 |
16,000 |
16,000 |
16,000 |
Prepaid expenses and other receivables |
1,147,167 |
1,147,167 |
1,157,146 |
1,157,146 |
Cash and cash equivalents |
141,384 |
141,384 |
1,035,201 |
1,035,201 |
|
|
|
|
|
Financial liabilities |
|
|
|
|
Amortised cost |
|
|
|
|
Trade and other payables |
10,714,011 |
10,714,011 |
10,478,036 |
10,478,036 |
Notes payable |
10,305,673 |
10,305,673 |
12,522,232 |
12,522,232 |
Convertible promissory notes |
8,033,786 |
8,033,786 |
8,108,264 |
8,108,264 |
The carrying value of cash and cash equivalents, the security deposit, prepaid expenses and other receivables, and trade and other payables, in the Directors' opinion, approximate to their fair value at 30 June 2018 and 31 December 2017.
10. Promissory notes
Convertible promissory notes
On 26 February 2018, the holders of the Convertible Promissory Notes agreed to amend the terms of the notes. The notes, previously due on 31 December 2017, are to be redeemed on 31 December 2018 (subject to certain early partial redemption options) unless previously converted. The notes will be convertible into fully paid ordinary shares of the Company at a conversion price of 5 pence per share and 3 pence per share after 31 March 2018. The interest on the notes is to accrue beginning 1 January 2018 and will be payable quarterly. The notes will pay interest of 5% (10% after 31 March 2018) if the Company elects to satisfy the interest in either cash or additional notes or 7% (12% after 31 March 2018) if the Company elects to satisfy the interest in ordinary shares of the Company at the volume weighted average price of the shares in the five trading days prior to their issue. For every £1 of note held, the Company will issue two warrants to subscribe for shares. The exercise price will be 7 pence per share (5 pence after 31 March 2018) with an expiration date of 31 December 2019. The Company commits to give the note holder the option to redeem the remaining portion of the notes held, subject to the Company having restructured its secured loan facility. The Company has been able to reach accommodations with these debt holders in the past, and we believe that, if required, we will be able to reach agreement to extend the maturity of the debt.
10. Promissory notes, (continued)
During 2018, US $205,617 (£149,261) additional convertible promissory notes were issued in payment of the accrued interest payable on the notes for the quarters ended 31 December 2017 and 31 March 2018. The Company redeemed a total of £54,923 of convertible promissory notes for the 30 June 2017 redemption date. The amounts were paid in January 2018. At 30 June 2018, the convertible promissory notes totaled US $8,033,786 (£6,087,585) and the warrants issued totaled 12,175,172.
The net proceeds received from the issue of the convertible promissory notes are classified as a financial liability due to the fact that the notes are denominated in a currency other than the Company's functional currency and that on any future conversion a fixed number of shares would be delivered in exchange for a variable amount of cash.
Promissory notes
In June 2014, the Company was granted a loan facility ("Facility") by an institutional lender (the "Lender"). In May 2018, the Company sold 8,496,467 shares of Motif Bio plc. The proceeds were used to pre-pay three months' of loan repayments to the Lender of the Facility. The remaining loan balance will be repaid in 4 monthly installments from 15 September to 15 December 2018. The balance of the loan at 30 June 2018 is US $3,336,806 and continues to be secured by the pledge of 27,475,591 ordinary shares of Motif Bio plc. Amphion has transferred the legal title to, but retains the beneficial interest in, the pledged shares. As part of the Facility, the Directors agreed to a Deed of Postponement that regulates the Directors' rights in respect to the repayment of any debt due to them from the Company. The Directors agreed to defer payment of their debt by the Company until the Facility is repaid in full.
In July 2017, the Company reached an agreement with the estate of R. James Macaleer, the former Chairman of the Company, to extend the maturity of the notes payable totaling US $6,308,600 to the end of 2017 in return for the grant of 3 million warrants (1 million with an exercise price of 8p, 1 million with an exercise price of 9p, and 1 million with an exercise price of 10p). In April 2018, the notes were extended to 31 December 2018. In no case will any payment be made on the new notes until the amounts outstanding under the Company's existing Facility are fully repaid. The final payment until the Facility is currently scheduled for 15 December 2018.
Reconciliation of movements of liabilities to cash flows arising from financing activities:
|
|
Convertible |
|
|
Notes payables |
promissory notes |
Total |
|
|
|
|
Balance at 1 January 2018 |
12,522,232 |
8,108,264 |
20,630.496 |
|
|
|
|
Changes from financing cash flows |
|
|
|
Repayment of promissory notes |
(2,523,603) |
(75,963) |
(2,599,566) |
Total changes from financing cash flows |
(2,523,603) |
(75,963) |
(2,599,566) |
|
|
|
|
Non-cash changes |
|
|
|
The effect of changes in foreign exchange rates |
- |
(204,131) |
(204,131) |
Convertible promissory notes issued to settle interest expense |
- |
205,616 |
205,616 |
Transaction costs |
307,044 |
- |
307,044 |
Total changes from non-cash changes |
307,044 |
1,485 |
308,529 |
|
|
|
|
Balance at 30 June 2018 |
10,305,673 |
8,033,786 |
18,339,459 |
11. Share capital
|
Number |
|
£ |
|
US $ |
|
|
|
|
|
|
Balance as at 31 December 2017 |
209,175,888 |
|
2,091,759 |
|
3,615,284 |
|
|
|
|
|
|
Issued and fully paid: |
|
|
|
|
|
Ordinary shares of 1p each |
799,562 |
|
7,996 |
|
10,844 |
|
|
|
|
|
|
Balance as at 30 June 2018 |
209,975,450 |
|
2,099,755 |
|
3,626,128 |
|
|
|
|
|
|
During the six months ended 30 June 2018, the following changes occurred to the share capital of the Company:
On 17 January, the Company issued 799,562 ordinary 1p shares at a premium of .828 per share (US $8,979) to Directors in payment of 2010 and 2016 fees.
12. Share based payments
On 31 October 2016, the Group established the 2016 Long Term Incentive Plan ("LTIP") to replace the 2006 Unapproved Share Option Plan that expired in June 2016. During 2018, 938,000 options were issued under the Plan.
|
2018 |
||
|
|
|
Weighted |
|
|
|
average |
|
Number of |
|
exercise |
|
share options |
|
price (in £) |
|
|
|
|
Outstanding at beginning of period |
11,966,472 |
|
0.04 |
Granted during the period |
938,000 |
|
0.02 |
Forfeited during the period |
(568,875) |
|
0.02 |
Expired during the period |
- |
|
- |
Outstanding at the end of the period |
12,335,597 |
|
0.05 |
|
|
|
|
Exercisable at the end of the period |
12,102,264 |
|
0.05 |
The fair value of options granted has been calculated using the Black Scholes model which has given rise to fair values per share of US$0.02. This is based on risk-free rates of 2.91% and volatility of 94.43%.
The Group recognised total costs of US $28,987 relating to equity-settled share-based payment transactions in 2018 which were expensed in the statement of comprehensive income during the period.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related partners are disclosed below.
On 1 April 2015, Motif Bio plc entered into an advisory and consultancy agreement with Amphion Innovations US Inc. Richard Morgan and Robert Bertoldi, Directors of the Company, are also Chairman and Director of Motif Bio plc. The consideration for the services is US $120,000 per annum. The agreement was amended in December 2016
13. Related party transactions, (continued)
so that either party may terminate the agreement at any time, for any reason, upon giving the other party 90 days advance written notice. Amphion Innovations US Inc.'s fee for the period ended 30 June 2018 was US $60,000.
On 1 April 2015, Motif Bio plc entered into a consultancy agreement with Amphion Innovations plc for Robert Bertoldi, a Director of Amphion Innovations plc, to provide services to Motif Bio plc. In July 2017, the agreement was amended to increase the consideration to US $125,000. The agreement was also amended in December 2016 so that either party may terminate the agreement at any time, for any reason, upon giving the other party ninety days advance written notice.
A subsidiary of the Company has entered into an agreement with Axcess International, Inc. ("Axcess") to provide advisory services. Richard Morgan and Robert Bertoldi, Directors of the Company, are also Chairman and Director of Axcess, respectively. Amphion Innovations US Inc. will receive a monthly fee of US $10,000 pursuant to this agreement. The agreement renews on an annual basis until terminated by one of the parties. The monthly fee is suspended for any month in which Axcess' cash balance falls below US $500,000. Amphion Innovations US Inc. received no fee during the period ended 30 June 2018.
A subsidiary of the Company has entered into an agreement with WellGen, Inc. ("WellGen") to provide advisory and consulting services. Richard Morgan and Robert Bertoldi, Directors of the Company, are also Chairman and Director of WellGen, respectively. The fee under this agreement is US $60,000 per quarter. The agreement renews annually until terminated by either party. The subsidiary's fee for the period ended 30 June 2018 was suspended. At 30 June 2018, US $1,320,000 of the advisory fees remain payable. This balance has been reduced by a provision for doubtful debts in the amount of US $1,320,000.
A subsidiary of the Company has entered into an agreement with PrivateMarkets, Inc. ("PrivateMarkets") to provide advisory services. Richard Morgan, a Director of the Company, is also the Chairman of PrivateMarkets. The fee under this agreement is US $30,000 per quarter until the successful sale of at least US $3,000,000 and thereafter, US $45,000 per quarter. This agreement will renew annually unless terminated by either party. The subsidiary's fee for the period ended 30 June 2018 was suspended. At 30 June 2018, US $770,000 remains payable by PrivateMarkets. The payable has been reduced by a provision for doubtful debts in the amount of US $770,000.
Amphion Innovations US Inc. has entered into an agreement with DataTern, Inc. ("DataTern") (a wholly owned subsidiary of the Company) to provide advisory and consulting services. Richard Morgan and Robert Bertoldi, Directors of the Company, are also Directors of DataTern. The quarterly fee under this agreement is US $60,000 and renews annually unless terminated by either party. The subsidiary's fee for the period ended 30 June 2018 was suspended.
During 2013, Richard Morgan, a Director of the Company, advanced US $190,000 to a subsidiary of the Company under promissory notes. The promissory notes accrue interest at 5% per annum and are payable in three years. In 2010, Richard Morgan advanced US $352,866 to the Company. In July 2014, the balance of this advance was converted into a demand note that accrues interest at 5% per annum. At 30 June 2018, US $81,301 remains outstanding. The net amount payable by the Group at 30 June 2018 to Richard Morgan is US $2,369,192. The amount payable includes a voluntary salary reduction of US $1,999,687, US $341,779 of which will be payable at the discretion of the Board at a later date.
At 30 June 2018, US $108,333 was due to Gerard Moufflet, a retired Director of the Company, for Director's fees and US $8,337 for expenses.
At 30 June 2018, US $1,151,235 was due to Robert Bertoldi, a Director of the Company, for voluntary salary reductions of which US $188,769 is payable by the discretion of the Board at a later date.
13. Related party transactions, (continued)
In May 2017, Richard Morgan and Robert Bertoldi, Directors of the Company, agreed to a Deed of Postponement where they have agreed to postpone the repayment of the amounts owed to them, which total US $4.3 million, until all other debts of the company are repaid.
14. Subsequent Events
On 16 August 2018, the Company sold 3,000,000 shares of Motif Bio plc for net proceeds of US $1,286,391. The net proceeds were used as partial repayment of the loan Facility, as well as ongoing business operations and development of Amphion's other Partner Companies. The remaining loan balance will be repaid in three monthly installments from 15 October to 15 December 2018. The Company has, however, entered into an agreement in principle, subject to entering into a definitive binding agreement, to defer further repayment of the Facility until 30 September 2019 and to potentially increase the size of the Facility by approximately US $1.4 million (approximately US $1.1 million after fees and expenses).
On 1 September 2018, the Company appointed Stephen Austin as a non-executive director.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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