Adamind Ltd (Adamind or 'the Company') Interim Results for the Six Months Ended 30 June 2005.LONDON London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. -- Adamind Ltd (LSE LSE - Language Sensitive Editor :ADA Ada, city, United States Ada (ā`ə), city (1990 pop. 15,820), seat of Pontotoc co., S central Okla.; inc. 1904. It is a large cattle market and the center of a rich oil and ranch area. ), the leading provider of media adaptation for multimedia messages (MMS (Multimedia Messaging Service) An enhanced transmission service that enables graphics, video clips and sound files to be transmitted via cellphones. Developed as part of the 3GPP project, MMS phones are generally backward compatible with SMS and EMS. ) and content services markets, announces its maiden MAIDEN. The name of an instrument formerly used in Scotland for beheading criminals. financial results for the six months ended 30 June June: see month. 2005 since its flotation flotation or froth flotation Most widely used process for extracting many minerals from their ores. The method separates and concentrates ores by altering their surfaces so that they are either repelled or attracted by water. in February February: see month. 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 November: see month. 2004 from the merger of the transcoding business units of Royal Philips (company) Philips - A Dutch multinational electronics company. It produces washing machines, consumer electronics, integrated circuits and light bulbs. Together with Sony they set the Compact Disc standard, especially Green Book CD-ROM. Electronics and Emblaze em·blaze 1 tr.v. em·blazed, em·blaz·ing, em·blaz·es 1. To set on fire. 2. To cause to glow; light up. 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 January: see month. 1, 2003. Operational highlights --Firmly established commercial relationship with leading systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. such as IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) and OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and relationship with four of the top six multimedia messaging centre (MMSC) infrastructure vendors (Ericsson Er·ics·son , John 1803-1889. American engineer and inventor who built the first ironclad warship, the Monitor (1862), which engaged the Confederate Merrimack in a famous naval battle of the Civil War (March 9, 1862). , LogicaCMG LogicaCMG (LSE: LOG, Euronext: LOG) is a UK-based global IT and management consultancy company. It is quoted on the London Stock Exchange and Euronext Amsterdam, and is a member of the FTSE 250 index of shares. , Motorola (Motorola, Inc., Schaumburg, IL, www.motorola.com) A leading manufacturer of semiconductor devices, electronics, telecommunications and satellite systems. Founded in Chicago in 1928 by Paul V. and Openwave (Openwave Systems Inc., Redwood City, CA, www.openwave.com) A software company that provides an application infrastructure for wireless data. Its microbrowsers and server software enable cellphones and other wireless devices to retrieve stock quotes, e-mail and other data from the Web. ) --Two new infrastructure channel partners added: Critical Path and CBOSS CBOSS Convergent Business Operation Support System (Moscow, Russia) --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 Content Adaptation is the action of transforming content to adapt to device capabilities. Content adaptation is usually related to mobile devices that require special handling because of their limited computational power, small screen size and constrained keyboard functionality. and support for Digital Rights Management --Revenues already being generated from providing media adaptation for services beyond picture messaging picture messaging n → (envío de) mensajes mpl con imágenes picture messaging picture n → picture messaging m, messagerie f , such as video, digital rights management, e-mail and MMS virus elimination --Announced today that the Company, with IBM as the system integrator See systems integrator. , has sold directly to SMART Communications Smart Communications, Inc. commonly known as "SMART", is the wholly-owned mobile phone subsidiary of PLDT. With over 25 million subscribers on its GSM network as of end-February 2007, equivalent to approximately 58 percent market share. of Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. . Shailendra Shankardas Kesarilal Shailendra (August 30, 1923 Rawalpindi-December 14, 1966 Mumbai) was a popular Indian Hindi lyricist. Early days Shailendra was born in Rawalpindi (Undivided India) to Kesarilal and Parvati Devi. He was eldest of their four sons. Jain Jain also Jai·na n. A believer or follower of Jainism. [Hindi jaina, from Sanskrit jaina-, relating to the saints, from jina , 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." 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 Direct selling is the marketing of products or services to consumers through sales tactics including presentations, demonstrations, and phone calls. It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or brokers. 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 As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma results of last year and were also higher than revenues of $3.06m for the whole of 2004. Operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 Cellco Partnership, doing business as Verizon Wireless, owns and operates the second largest wireless telecommunications network in the United States, based on total wireless customers. , one of the two largest North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. 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 TELUS Telemetric Universal Sensor Mobility as part of Openwave's multimedia messaging services (messaging) Multimedia Messaging Services - (MMS) A feature of some mobile telephones that allows them to send messages including text, sound, images and video. centre (MMSC) solution for its operator customer base across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . 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 Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , which will enable Azercell Azercell Telecom is a mobile telecommunications company, located in Baku, Azerbaijan. Founders Azercell Telecom was established on January 19th 1996. The co-founders were Fintur Holdings B.V. and the Ministry of Communications of Azerbaijan Republic. 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 The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. 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 The ability to play back some number of musical notes simultaneously. For example, 16-voice polyphony means a total of 16 notes, or waveforms, can be played concurrently. ringtones, cartoons Many of the cartoons used in this database were obtained from The Cartoon Bank, Dobbs Ferry, NY, which has a huge selection of cartoons on every subject (visit www.cartoonbank.com). 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 1. (mathematics) embedding - One instance of some mathematical object contained with in another instance, e.g. a group which is a subgroup. 2. (theory) embedding - (domain theory) A complete partial order F in [X -> Y] is an embedding if Adamind's software, Critical Path's Memova Mobile bridges the gap between Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the 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 Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. . The fact that viruses can propogate via MMS rather than just Bluetooth A wireless personal area network (WPAN) standard for short-range transmission of digital voice and data. Bluetooth is widely used for hands-free cellphone operation, including wireless headsets and connecting to Bluetooth-enabled automobiles that turn the car's audio system into a (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 (1) One at a time. CD-ROM recorders (CD-R drives) are commonly called one-off machines because they write one CD-ROM at a time. (2) Only once. Software that is written to solve a specific problem only one time is sometimes called a one-off. currency gain of $0.6m after the Company converted its approx GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 14m net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). 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 consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. U.S. dollars in thousands, except share data
30 June 31
2005 December
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 Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . CONSOLIDATED STATEMENTS OF OPERATIONS AND PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands, except share and per share data
Six months
ended 30 Year ended
Six months June 31 December
ended 2004 *) 2004 *)
----------- -----------
30 June Combined Combined
2005 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 Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. 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
=========== ====== =========== ======
Additional Total
paid-in Accumulated Share based shareholders'
capital deficit compensation equity
---------- ----------- ------------ --------------
Balance as of
November 2004 (date
at 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 September: see month. 2004, Emblaze Ltd. ("Emblaze"( a company organized under the laws of the State of Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. , and traded on the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. , entered into an agreement ("the Agreement") with DommelRiver Israel Ltd., Philips Digital Networks B.V. ("PDN (1) (Packet Data Network) See packet switching. (2) (Premises Distribution Network) The network that connects a customer's ADSL transceiver (ATU-R) to the Service Modules (PCs, routers, set-top boxes, etc.). See DSL. ") and Koninklijke Philips Electronics N.V. ("Philips") (all of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. 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 Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. 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 (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. 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 The ability for one system to communicate or work with another. See interoperability. rich-media services including MMS, content download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , mobile browsing See browse. and more, reaching a wealth of diversified diversified (di·verˑ·s 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 Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. 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 Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. ") was agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy between Emblaze and Philips Parties pursuant to the Agreement and related documents entered into by and between Adamind Ltd., Emblaze and Philips Parties. ADAMIND LTD. AND ITS SUBSIDIARY NOTES TO FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 1:- GENERAL (Cont.) 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
=======
NOTES TO FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES a. The significant accounting policies and methods of computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. 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 International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). ("IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ") No. 2 (see c below) and implemented International Accounting Standard ("IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. ") 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 Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has These financial statements have been prepared in a condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with IAS 32 and IAS 39. Management determines the appropriate classification of its investments in marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. 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 Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses charge directly in shareholders' equity. Realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses on sales of investments, as determined on a specific identification basis, will be included in the statement of operations See Income statement. . As of 30 June 2005, no impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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 other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 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 vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) 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 additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements . In December 2003, the International Accounting Standards Board  An editor has expressed concern that this article or section is .Please help improve the article by adding information and sources on neglected viewpoints, or by summarizing and ("IASB IASB See 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. NOTES TO FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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 To obliterate, replace, make void, or useless. Supersede means to take the place of, as by reason of superior worth or right. A recently enacted statute that repeals an older law is said to supersede the prior legislation. the previously released versions released version - release 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 Combined financial statement A financial statement that merges the assets, liabilities, net worth, and operating figures of two or more affiliated companies. A combined statement is distinguished from a consolidated financial statement of a company and subsidiaries, which must 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 Pro forma financial statements A firm's financial statements as adjusted to reflect a projected or planned transaction. "What-if" analysis. 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 (1) (Enterprise Management Architecture) An earlier strategic plan from Digital for integrating network, system and application management. It provided the operating environment for managing a multi-vendor network. ") and Philips MP4Net media adaptation business for these periods. Unaudited pro forma combined financial statements is presented for illustrative il·lus·tra·tive adj. Acting or serving as an illustration. il·lus  tra·tive·ly adv.Adj. 1. 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. NOTES TO FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 3:- UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
Six months ended 30 June 2004
----------------------------------------------------
Philips
MP4Net
media
adaptation Combined
EMA business Adjustment References pro 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
===========
NOTES TO FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 3:- UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
From 7 *)
November
2004 (date
of
commencement
of
operation)
through 31
Ten months ended 31 December
October 2004 2004
-------------------- --------------
Philips
MP4Net
media
adaptation
EMA business Adamind Ltd.
-------- ----------- --------------
Historical Historical
(Audited) (Audited)
-------------------- --------------
Revenues $1,307 $775 $978
Cost of revenues 101 91 60
-------- ----------- --------------
Gross profit 1,206 684 918
-------- ----------- --------------
Operating expenses:
Research and development,
net 1,069 2,222 391
Sales and marketing 574 722 299
General and administrative 355 200 175
Amortization of intangible
assets 264 - 150
-------- ----------- --------------
Total operating expenses 2,262 3,144 1,015
---------------------------- -------- ----------- --------------
Operating loss (1,056) (2,460) (97)
Financial income (expenses),
net - (90) 10
-------- ----------- --------------
Net loss $(1,056) $(2,550) $(87)
======== =========== ==============
Basic and diluted net loss
per Ordinary share
Weighted average number of
Ordinary shares used in
computing basic and diluted
net loss per Ordinary share
Year ended
31 December
2004
--------------
Combined
Adjustment References pro forma
---------- --------------
Revenues $3,060
Cost of revenues 252
--------------
Gross profit 2,808
--------------
Operating expenses:
Research and development,
net (137) A 3,545
Sales and marketing 1,595
General and administrative 730
Amortization of intangible
assets 368 C 782
---------- --------------
Total operating expenses 231 6,652
---------------------------- ---------- --------------
Operating loss (231) (3,844)
Financial income (expenses),
net (80)
---------- --------------
Net loss $(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 Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. . Reference: A Elimination of research and development costs related to duplicated activities. B Amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible 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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