Interim Results
Adamind Ltd
13 September 2005
13 September 2005
Adamind Ltd (Adamind or "the Company")
Interim Results for the six months ended 30 June 2005
Adamind Ltd (LSE: ADA), the leading provider of media adaptation for multimedia
messages (MMS) and content services markets, announces its maiden financial
results for the six months ended 30 June 2005 since its flotation in February
2005.
Financial highlights
• Revenues increased 121% to $3.2m (Combined Pro-forma* H1 2004: $1.4m)
• Operating loss reduced by 62% to $0.83m (Combined Pro-forma H1 2004:$2.2m)
• Net cash as of 30 June 2005 amounted to $28.9m
• Net profit with interest income was $58K
• Gross margin maintained at 91%
• On track to deliver further growth for the full year 2005 and beyond
* Adamind was formed in November 2004 from the merger of the transcoding
business units of Royal Philips Electronics and Emblaze Ltd; Philips MP4NET and
Emblaze Transcoding. These are the combined financial information of two
business of H1 2004 as if the business combination had occurred on January 1,
2003.
Operational highlights
• Firmly established commercial relationship with leading systems
integrators such as IBM and OEM relationship with four of the top six
multimedia messaging centre (MMSC) infrastructure vendors (Ericsson,
LogicaCMG, Motorola and Openwave)
• Two new infrastructure channel partners added: Critical Path and CBOSS
• Total number of Adamind-enabled mobile networks up by 10 to more than 90
worldwide
• Verizon Wireless launches MMS service; nearly 30% of their subscribers
have registered for MMS services
• Strategic partnership with Ericsson broadened to include video content
adaptation and support for Digital Rights Management
• Revenues already being generated from providing media adaptation for
services beyond picture messaging, such as video, digital rights
management, e-mail and MMS virus elimination
• Announced today that the Company, with IBM as the system integrator, has
sold directly to SMART Communications of Philippines.
Shailendra Jain, chief executive of Adamind, said: "We have delivered a solid
set of maiden half-year results following Adamind's flotation in February. The
growth reflects an increasing pace of network infrastructure investment by
mobile network operators as multi-media messaging and other rich content
services become increasingly popular with end-users worldwide.
"The Company entered the second half with a solid order book amid signs of
rising MMS traffic volumes. With Adamind's long term prospects directly tied to
the volume of MMS and content traffic passing through many of the world's
leading mobile networks, our confidence in delivering further growth in revenues
for the full year and in 2006 is reinforced."
Enquiries:
Adamind
Shailendra Jain, Eli Sofer +972 9769 9500
Corfin Communications
Harry Chathli, Neil Thapar +44 20 7929 8989
Overview
In announcing its maiden results since its flotation in February 2005, Adamind
is pleased to report a strong operating performance in the first half of 2005,
reflecting the Company's success in establishing its media adaptation software
as a preferred choice of leading systems integrators such as IBM and four of the
world's top six MMSC infrastructure vendors: Ericsson, LogicaCMG, Motorola and
Openwave.
In addition to strengthening the Company's ties with the top MMSC vendors and
systems integrators Adamind has also increased its direct selling efforts.
Today's announcement with SMART Communications is a result of these efforts.
Revenues increased by 121% to $3.2m compared with the corresponding combined pro
forma results of last year and were also higher than revenues of $3.06m for the
whole of 2004. Operating losses reduced to $0.83m (Combined Pro-forma H1 2004:
$2.2m). Gross margin was maintained at 91%.
The first half of 2005 has seen a strong uplift in demand for Adamind's media
adaptation software as network operators launch MMS and other content services
(such as picture messages, music and video downloads) as a means of boosting
average revenues per user. At the same time advanced new multimedia handsets and
other mobile devices are becoming available in greater numbers and at affordable
prices. This provides a sound platform for growth in demand for Adamind's
software, which enables MMS and other content to be delivered to any mobile
device through any network. Over the period the total number of operators using
Adamind's solutions increased to more than 90 thus maintaining the Company's
leadership in terms of deployments.
Adamind also benefited from higher volumes of MMS traffic running through
networks as well as the launch of a wider range of content services by some
operators. Rising traffic volumes result in operators buying higher capacity
usage for software while additional applications results in more licensing fees
for the Company.
Significant MMS deployments since flotation
In March 2005, it was announced that Adamind deployed its media adaptation
platform integrated into the Motorola MMSC at Verizon Wireless, one of the two
largest North American mobile phone companies with more than 40 million
subscribers. Since the launch of the service nearly 30% of the subscribers have
registered for MMS and is now making a growing contribution to Adamind's
revenues.
Also in March 2005, Adamind's software was deployed at TELUS Mobility as part of
Openwave's multimedia messaging services centre (MMSC) solution for its operator
customer base across North America. The media adaptation software is deployed at
Openwave's MMSC to provide an overall streamlined and scalable messaging
platform to operators across North America.
At the time of the flotation it was a stated aim of the Company to penetrate
into more high growth regions. In February the Company announced a tie up with
CBOSS, the largest MMSC infrastructure vendor in Russia and Eastern Europe,
which will enable Azercell to offer seamless MMS and rich mobile content
services to their customer base.
Beyond picture messages
The Company has also made considerable progress with its strategy of providing
media adaptation for services beyond picture messaging. Over the period Adamind
expanded its offering to rich media content beyond person to person MMS to be
sent over any network and any device. Its products are now being deployed to
enable audio/video content service to be transmitted to any handset over mobile
networks. Also, Adamind now addresses the market of e-mail traffic and
elimination of MMS viruses.
Adamind has announced today deployment of its software at the heart of Nokia's
MMSC at Philippine's SMART Communications to deliver picture messaging, animated
e-cards, polyphonic ringtones, cartoons and movies to its 20 million
subscribers. This deal is expected to generate significant revenues in 2005 and
2006.
Adamind has broadened its alliance with Ericsson, the world's leading telecom
supplier, which has integrated Adamind's video content adaptation software and
digital rights management in addition to picture messaging as part of its
network infrastructure solution. This has already started generating revenues
but is expected to contribute more significantly in 2006
In the early part of the second half the Company announced the alliance with
Critical Path, Inc. to address the market for email traffic. The alliance with
Critical Path, Inc. a leading provider of messaging software and services, marks
the first significant step by Adamind to address the market for email traffic.
By embedding Adamind's software, Critical Path's Memova Mobile bridges the gap
between Internet email and MMS, enabling consumers to exchange multimedia-rich
email messages and providing operators with a new way to drive MMS usage. This
means every user with an MMS-enabled device can send and receive email with
picture, audio and video attachments. Revenues from this alliance will commence
in the latter part of 2005.
Last week Adamind announced that it has deployed its virus detection
capabilities and anti-abuse support to eliminate spread of the CommWarrior MMS
virus among Singapore's MobileOne's, MMS-active subscribers.
Independent industry experts such as Strategy Analytics believe a full scale
threat from virus attack is some way away, however, it seems likely that viruses
will be created that are capable of infecting devices with most or all of the
major operating systems. The fact that viruses can propogate via MMS rather than
just Bluetooth (which was the case in the earliest viruses) significantly
increases the broader threat. The wireless industry, is expected to ensure that
virus protection services are built into networks as opposed to devices and
avoid the mistakes of the PC market. To this end Adamind is well placed to
benefit from such action.
Financial Review
Revenues increased by 121% to $3.2m (Pro-forma H1 2004: $1.4m). The Company has
benefited from rising MMS traffic volumes, new capacity upgrades by operators
and take up of additional content services by operators.
The Company had a one-off currency gain of $0.6m after the Company converted its
approx £14m net proceeds from the AIM placing into US dollars. This resulted in
the company having net cash from operating activities of $0.65m and posting a
small net profit of $0.06m.
Sales and marketing expenditure amounted to $1.2m compared with $0.82m in H1
2004 combined pro forma numbers. Spending is expected to rise during the second
half as the Company's builds a global sales infrastructure and fosters direct
deals with operators. Net cash as of 30 June amounted to $28.9m.
Gross margins for the half amounted to 91% and are expected to be maintained
between the 89-91% range.
Research and Development
Research and development expenditure net amounted to $1.6m (Combined Pro-forma
H1 2004: $1.9m), representing 49% on first half revenues for 2005. It is likely
that spending in this area will continue to be significant as the Company
develops more products to take advantage of the considerable market
opportunities available.
Outlook
Adamind has established a solid foundation for the full year with good first
half results as multi-media messaging and other rich content services become
increasingly popular with end-users worldwide.
The Company entered the second half with a solid order book and signs of rising
MMS traffic volumes. With Adamind's long term prospects directly tied to the
volume of MMS and content traffic passing through many of the world's leading
mobile networks, our confidence in delivering further growth in revenues for the
full year and in 2006 is reinforced.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share data
---------- ----------
30 June 31 December
2005 2004
---------- ----------
Unaudited
----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,802 $ 2,799
Short-term available-for-sale marketable securities
and accrued interest 15,079 -
Trade receivables 819 233
Other accounts receivable and prepaid expenses 220 41
---------- ----------
Total current assets 24,920 3,073
---------- ----------
LONG-TERM HELD-TO-MATURITY MARKETABLE SECURITIES 5,029 -
---------- ----------
SEVERANCE PAY FUNDS 116 33
---------- ----------
EQUIPMENT, NET 408 413
---------- ----------
INTANGIBLE ASSETS, NET 3,229 3,681
---------- ----------
$ 33,702 $ 7,200
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 187 $ 19
Employees and payroll accruals 538 305
Accrued expenses and other liabilities 1,269 616
Deferred revenues 351 304
---------- ----------
Total current liabilities 2,345 1,244
---------- ----------
ACCRUED SEVERANCE PAY 122 33
---------- ----------
SHAREHOLDERS' EQUITY:
Share capital -
Series A Convertible Preferred shares of NIS 0.01
par value: Authorized: 0 and 5,000,000 shares as of
30 June 2005 and 31 December 2004, respectively;
Issued and outstanding: 0 and 4,800,000 shares as
of 30 June 2005 and 31 December 2004, respectively - 11
Ordinary shares of NIS 0.01 par value : Authorized:
50,000,000 and 45,000,000 shares as of 30 June 2005
and 31 December 2004, respectively; Issued and
outstanding: 35,363,636 and 19,200,000 shares as of
30 June 2005 and 31 December 2004, respectively 80 43
Additional paid-in capital 31,069 5,956
Share based compensation 115 -
Accumulated deficit (29) (87)
---------- ----------
Total shareholders' equity 31,235 5,923
---------- ----------
$ 33,702 $ 7,200
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND PRO FORMA COMBINED CONSOLIDATED
FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
Six months Six months Year ended
ended ended 31 December
30 June 2005 30 June 2004 *) 2004 *)
-------------- --------------
Combined Combined
pro forma pro forma
-------------- --------------
Unaudited
-------------------------------------------------
Revenues $ 3,187 $ 1,441 $ 3,060
Cost of revenues 287 133 252
----------- ---------- -----------
Gross profit 2,900 1,308 2,808
----------- ---------- -----------
Operating expenses:
Research and development, net 1,563 1,883 3,545
Sales and marketing 1,192 821 1,595
General and administrative 527 341 730
Amortization of intangible assets 451 443 782
----------- ---------- -----------
Total operating expenses 3,733 3,488 6,652
----------- ---------- -----------
Operating loss (833) (2,180) (3,844)
Financial income
(expenses), net 891 (68) (80)
----------- ---------- -----------
Net profit (loss) $ 58 $ (2,248) $ (3,924)
=========== ========== ===========
Basic net profit (loss)
per Ordinary share $ 0.00 $ (0.12) $ (0.20)
=========== ========== ===========
Weighted average number
of Ordinary shares used in
computing basic net profit
(loss) per Ordinary share 31,681,919 19,200,000 19,200,000
=========== =========== ===========
Diluted net profit (loss) per
Ordinary share $ 0.00 $ (0.12) $ (0.20)
=========== =========== ===========
Weighted average number of
Ordinary shares used in computing
diluted net profit (loss) per
Ordinary share 33,906,437 19,200,000 19,200,000
=========== =========== ===========
*) See also Note 3.
The accompanying notes are an integral part of the consolidated financial
statements.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands, except share data
Series A convertible
Preferred shares Ordinary shares
------------------------------------------------
Number Amount Number Amount
---------- -------- ---------- --------
Balance as of November 2004
(date at commencement of
operations) - $ - - $ -
Issuance of shares *) 4,800,000 11 19,200,000 43
Net loss - - - -
---------- -------- ----------- --------
Balance as of
31 December 2004 4,800,000 11 19,200,000 43
Issuance of Ordinary
shares upon Initial
Public Offering **) (4,800,000) (11) 16,163,636 37
Share based compensation - - - -
Net profit - - - -
---------- -------- ----------- --------
Balance as of
30 June 2005 (unaudited) - $ - 35,363,636 $ 80
========== ======== =========== ========
*) Net of issuance expenses of $ 100.
**) Net of issuance expenses of $ 2,906.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands, except share data
Additional Total
paid-in Accumulated Share based shareholders'
capital deficit compensation equity
---------- ----------- ------------ -------------
Balance as of
30 November 2004 (date
commencement of
operations) $ - $ - $ - $ -
Issuance of shares *) 5,956 - - 6,010
Net loss - (87) - (87)
---------- ----------- ------------ -------------
Balance as of
31 December 2004 5,956 (87) - 5,923
Issuance of
Ordinary shares upon
Initial Public
Offering **) 25,113 - - 25,139
Share based compensation - - 115 115
Net profit - 58 - 58
---------- ----------- ------------ -------------
Balance as of 30
June 2005 (unaudited) $ 31,069 $ (29) $ 115 $ 31,235
========== =========== ============ =============
*) Net of issuance expenses of $ 100.
**) Net of issuance expenses of $ 2,906.
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months
ended 30 June
2005
-------------
Unaudited
-------------
Cash flows from operating activities:
---------------------------------------
Net profit $ 58
Adjustments to reconcile net profit to net cash provided
by operating activities:
Depreciation and amortization 570
Increase in trade receivables, other accounts receivable
and prepaid expenses (844)
Increase in trade payables, employees and payroll accruals,
accrued expenses and other liabilities and severance pay, net 708
Share based compensation 115
Increase in deferred revenues 47
-------------
Net cash provided by operating activities 654
-------------
Cash flows from investing activities:
---------------------------------------
Purchase of equipment (113)
Investment in short-term available-for-sale marketable securities (15,000)
Investment in long-term held-to-maturity marketable securities (5,029)
-------------
Net cash used in investing activities (20,142)
-------------
Cash flows from financing activities:
---------------------------------------
Proceeds from issuance of shares 28,045
Issuance expenses (2,554)
-------------
Net cash provided by financing activities 25,491
-------------
Increase in cash and cash equivalents 6,003
Cash and cash equivalents at the beginning of the period 2,799
-------------
Cash and cash equivalents at the end of the period $ 8,802
=============
Non-cash financing activities:
--------------------------------
Conversion of Series A Convertible Preferred shares to
Ordinary shares $ 11
=============
Issuance expenses payable $ 352
=============
The accompanying notes are an integral part of the consolidated financial
statements.
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 1:- GENERAL
a. Background:
On 17 September 2004, Emblaze Ltd. ("Emblaze"( a company organized under the
laws of the State of Israel, and traded on the London Stock Exchange, entered
into an agreement ("the Agreement") with DommelRiver Israel Ltd., Philips
Digital Networks B.V. ("PDN") and Koninklijke Philips Electronics N.V.
("Philips") (all of the aforementioned Philips companies - "Philips Parties")
to transfer their respective media adaptation business to a new Israeli-based
company, Adamind Ltd. ("Adamind Ltd."). Emblaze agreed to contribute the Emblaze
media adaptation business ("Emblaze Media Adaptation Business") and operations
in consideration for the issuance of Ordinary shares of Adamind Ltd., and the
Philips Parties agreed to contribute the MP4Net media adaptation business
("Philips MP4Net media adaptation business") to Adamind Ltd. in consideration
for the issuance of Ordinary shares of Adamind Ltd., all as set forth in the
Agreement. In addition, Emblaze agreed to make an equity investment of $ 2,000
in Adamind Ltd. in consideration of the issuance of Series A Convertible
Preferred shares of Adamind Ltd., as set forth in the Agreement (see c. and d.
below).
Adamind Ltd. has a wholly-owned subsidiary in the U.S. ("Adamind Inc."), which
is primarily engaged in marketing, sales, professional services and certain
general and administrative functions associated with Adamind Ltd.'s activities.
b. Adamind develops and licenses proprietary media adaptation technology.
Adamind's software products enable multimedia data applications and services to
be accessible across disparate types of networks (mobile and fixed-wire) and
consumer devices. The Company's core technologies aims to solve the problem of
application-to-person and person-to-person media transactions (e.g., sending of
images, video and ringtones) between non-compatible devices, enabling network
operators to launch interoperable rich-media services including MMS, content
download, mobile browsing and more, reaching a wealth of diversified mobile and
other devices.
Adamind's solutions are primarily targeted at cellular network operators,
multimedia messaging center vendors, and system integrators providing mobile
infrastructure solutions worldwide.
c. Pursuant to the Agreement, on 7 November 2004, Emblaze transferred to Adamind
Ltd. assets, including intellectual property, and liabilities related to the
media adaptation business with a net carrying value in the accounts of Emblaze
of $ 610 in consideration of the issuance of 12,000,000 Ordinary shares. In
addition, Emblaze transferred to Adamind Ltd. $ 2,000 in cash as an equity
investment in consideration of 4,800,000 Series A Convertible Preferred shares.
The identification of the assets and liabilities transferred ("the transferred
net assets") was agreed upon between Emblaze and Philips Parties pursuant to the
Agreement and related documents entered into by and between Adamind Ltd.,
Emblaze and Philips Parties.
d. Business combination:
Pursuant to the Agreement, on 7 November 2004, the Philips Parties agreed to
contribute the Philips MP4Net media adaptation business to Adamind Ltd. in
consideration for the issuance of Ordinary shares of Adamind Ltd. and other
consideration paid by Emblaze.
The transaction has been accounted for under the purchase method of accounting,
under which Adamind Ltd. is considered as the acquirer of the Philips MP4Net
media adaptation business from Philips. Accordingly, the results of operations
of Philips MP4Net media adaptation business were included in the consolidated
statements of operations of Adamind Ltd., commencing 7 November 2004.
The estimated fair value of the identifiable assets acquired and liabilities
assumed as of 7 November 2004 are as follows:
Current assets $ 262
Equipment 217
Acquired technology 2,266
Customer agreements 248
--------
2,993
--------
Accrued expenses and other liabilities (91)
Deferred revenues (76)
--------
(167)
--------
Fair value of net assets 2,826
Goodwill arising on acquisition 674
--------
$ 3,500
========
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. The significant accounting policies and methods of computation applied in the
preparation of the interim financial statements are the same as those applied in
the annual financial statements of the Company as of 31 December 2004. In
addition, in 2005 the Company adopted International Financial Reporting
Standards ("IFRS") No. 2 (see c below) and implemented International Accounting
Standard ("IAS") No. 32, "Financial Instruments: Disclosure and Presentation",
and IAS 39, "Financial Instruments: Recognition and Measurement" (see b below),
with respect to accounting for marketable securities.
These financial statements have been prepared in a condensed format as of 30
June, 2005, and for the six months then ended ("interim financial statements").
These financial statements should be read in conjunction with the Company's
audited annual financial statements and accompanying notes as of 31 December
2004.
b. Marketable securities:
The Company accounts for investments in debt securities in accordance with IAS
32 and IAS 39. Management determines the appropriate classification of its
investments in marketable debt securities at the time of purchase and
re-evaluates such determinations at balance sheet date. Debt securities that are
designated as available-for-sale are stated at fair value, with unrealized gains
and losses charge directly in shareholders' equity. Realized gains and losses on
sales of investments, as determined on a specific identification basis, will be
included in the statement of operations. As of 30 June 2005, no impairment has
been identified.
c. Adoption of new standards:
Commencing 1 January 2005, the Company has adopted IFRS 2, "Share Based
Payment". IFRS 2 requires an expense to be recognized where the Company buys
goods or services in exchange for shares or rights over shares ("equity-settled
transactions"), or in exchange for other assets equivalent in value to a given
number of shares or rights over shares ("cash-settled transactions"). The main
impact of IFRS 2 on the Company is the expense of employees' and directors'
share options and other share-based incentives by using an option-pricing-model.
The Company has applied IFRS 2 only to equity-settled awards granted after 7
November 2002 that had not vested on or before 31 December 2004.
The effect of the adoption of IFRS 2 on the six months ended 30 June 2005 is an
increase in the employee benefits expenses in the amount of $115 with a
corresponding increase in additional paid-in capital.
In December 2003, the International Accounting Standards Board ("IASB") released
revised IAS 32 and IAS 39. These standards replace IAS 32 (revised 2000), and
supersedes IAS 39 (revised 2000), and should be applied for annual periods
beginning on or after 1 January 2005. The amendments do not have a material
impact on the consolidated financial statements.
In December 2003, as a part of the IASB's project to improve International
Accounting Standards, the IASB released revisions to the following standards
that supersede the previously released versions of those standards: IAS 1,
"Presentation of Financial Statements", IAS 2, "Inventories"; IAS 8, "Accounting
Policies, Changes in Accounting Estimates and Errors"; IAS 10, "Events after
Balance Sheet Date"; IAS 16, "Property, Plant and Equipment"; IAS 17, "Leases";
IAS 21, "The Effects of Changes in Foreign Exchange Rates"; IAS 24, "Related
Party Disclosures"; IAS 27, "Consolidated and Separate Financial Statements";
IAS 28, "Investments in Associates"; IAS 31, "Interests in Joint Ventures"; IAS
33, "Earnings Per Share"; and IAS 40, "Investment Property". The revised
standards should be applied for annual periods beginning on or after 1 January
2005. The amendments do not have a material impact on the consolidated financial
statements.
NOTE 3:- UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements has been
prepared to give effect to the acquisition of Philips MP4Net media adaptation
business by Adamind Ltd. ("the Transaction") under the purchase method of
accounting as if it had occurred on 1 January 2003 after giving effect to the
adjustments described in the accompanying notes. This financial statements is
not intended to be a profit forecast and the profits of Adamind Ltd. will not
necessarily be in line with such data.
The unaudited pro forma combined financial statements reflects the best
estimates of Adamind Ltd.'s management; however, the actual results of
operations may differ significantly from the pro forma amounts reflected herein
because of various factors, including, without limitation, access to additional
information, changes in value and changes in operating results between the date
of preparation of the unaudited pro forma financial statements and the future
operation of Adamind Ltd.
The following unaudited pro forma combined statements of operations for the six
months ended 30 June 2004 and for the year ended 31 December 2004 give effect to
the Transaction as if it had occurred on 1 January 2003 and combine the
historical statements of operations of Emblaze Media Adaptation ("EMA") and
Philips MP4Net media adaptation business for these periods.
Unaudited pro forma combined financial statements is presented for illustrative
purposes only and is not necessarily indicative of the results of operations
that would have actually been reported had the Transaction occurred at the
beginning of the period presented, nor is it necessarily indicative of future
results of operations. The unaudited pro forma combined financial statements are
based upon the respective separate financial statements of EMA and Philips
MP4Net media adaptation business. The pro forma adjustments are based on
available financial statements and certain estimates and assumptions that
Adamind Ltd.'s management believes are reasonable and that are set forth in the
notes to the unaudited pro forma combined financial statements.
Six months ended 30 June 2004
----------------------------------------------
Philips
MP4Net
media Combined
adaptation Adjust- Refer- pro
EMA business ment ences forma
-------- ---------- --------- -------- --------
Unaudited Unaudited
---------------------------------------------------
Revenues $ 968 $ 473 $ - $ 1,441
Cost of revenues 75 58 - 133
-------- ---------- --------- ---------
Gross profit 893 415 - 1,308
-------- ---------- --------- ---------
Operating expenses:
Research and development,
net 642 1,256 (15) A 1,883
Sales and marketing 344 477 - 821
General and administrative 233 108 - 341
Amortization of intangible
assets 185 - 258 B 443
-------- ---------- --------- ---------
Total operating expenses 1,404 1,841 243 3,488
-------- ---------- --------- ---------
Operating loss (511) (1,426) (243) (2,180)
Financial expenses, net - (68) - (68)
-------- ---------- --------- ---------
Net loss $ (511) $ (1,494) $ (243) $ (2,248)
======== ========== ========= =========
Basic and diluted net
loss per Ordinary share $ (0.12)
=========
Weighted average number
of Ordinary shares used in
computing basic and
diluted net loss per share 19,200,000
==========
From 7*)
November
2004
(date of
commence-
ment of
operation)
Ten months through 31 Year ended
ended 31 December 31 December
October 2004 2004 2004
------------ ---------- -----------
Philips
MP4Net
media Combined
adaptation Adamind Adjust- Refer- pro
EMA business Ltd. ment ences forma
------- -------- ----------- -------- ----- ---------
Historical Historical
(Audited) (Audited)
---------------- ----------
Revenues $ 1,307 $ 775 $ 978 $ 3,060
Cost of revenues 101 91 60 252
-------- ------ ----------- ---------
Gross profit 1,206 684 918 2,808
-------- ------ ----------- ---------
Operating expenses:
Research and development,
net 1,069 2,222 391 (137) A 3,545
Sales and marketing 574 722 299 1,595
General and administrative 355 200 175 730
Amortization of intangible
assets 264 - 150 368 C 782
-------- ------ ----------- ------ ---------
Total operating expenses 2,262 3,144 1,015 231 6,652
-------- ------ ----------- ------ ---------
Operating loss (1,056) (2,460) (97) (231) (3,844)
Financial income
(expenses), net - (90) 10 (80)
-------- ------ ----------- ------ ---------
Net loss $(1,056)$(2,550) $ (87) $(231) $ (3,924)
======== ====== =========== ====== =========
Basic and diluted net
loss per Ordinary share $ (0.20)
=========
Weighted average number
of Ordinary shares used in
computing basic and
diluted net loss per
Ordinary share 19,200,000
==========
*) Date of commencement of operations; the results of operation from 1 November
2004 through 6 November 2004 were considered immaterial.
Reference:
A Elimination of research and development costs related to duplicated
activities.
B Amortization of intangible assets acquired from Philips MP4Net media
adaptation business for the six months ended 30 June 2004.
C Amortization of intangible assets acquired from Philips MP4Net media
adaptation business for the year ended 31 December 2004.
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