RNS Number:6688J
Zone-IP Limited
29 September 2006
7.00am on 29 September 2006
Zone-IP Ltd.
("Zone-IP" or the "Company")
Interim Results for the six months ended 30 June 2006
Ra'anana, Israel, 28 September 2006: Zone-IP Ltd. (LSE: ZIP), formerly known as
Ki-Bi Mobile Technologies Ltd ("Ki-Bi"), announces its interim results for the
six months ended 30 June 2006.
Financial highlights
* Total revenues from operations in the period were $251,000 (H1 2005:
$357,000)
* Net loss in the period was $2.6 million (H1 2005: $2.1 million)
* Total assets as at 30 June 2006 were $10.3 million ($13.6 million at 31
December 2005)
* Loss per share was $0.13 (H1 2005: Loss per share $0.10)
* Strong cash portfolio of $9.9 million at period end
Operational highlights
* In April 2006, the Company decided to cease its card operations but
continues to support its existing customers.
* In July 2006, the Company acquired 100 per cent. of Emblaze V CON Ltd
and was readmitted to trading on AIM on 13 July 2006.
* The Company also changed its name from Ki-Bi Mobile Technologies Ltd. to
Zone-IP Ltd.
Enquiries:
Zone-IP
Hadas Gazit +972 9 769 9633
John East & Partners Limited
David Worlidge/Simon Clements +44 (0) 020 7628 2200
Chairman's Statement
I am pleased to report the interim results for the six months ended 30 June
2006. The results relate to a period prior to the acquisition of Emblaze V CON
Ltd ("Emblaze V CON") which was completed on 13 July 2006 and as such only
reflect the trading activities of the card operations.
Financial Overview
In April 2006, the Company decided to discontinue the card operations but
continues to support its existing customers. As a result of this decision, 17
employees including the chief executive officer and chief financial officer
ceased employment with the Company.
The Company's revenue decreased to $251,000 (H1 2005: $357,000) and net losses
increased to $2.6 million compared with a loss of $2.1 million in the first half
of 2005.
The Company's operating loss for the period was $2.7 million (H1 2005: $1.4
million) and the net loss per share was $0.13 (H1 2005: $0.10 loss per share).
Current Trading
Since the completion of the acquisition of Emblaze V CON, the principal
activities of the Company have been the provision of video over-IP conferencing
solutions. The Directors continue to be encouraged by the progress Emblaze V CON
has demonstrated in strengthening and improving its leadership position in IP
based videoconferencing.
Strategy
The demand for communication tools using IP (Internet Protocol) standards is
expected to increase as corporations worldwide move to replace and converge
their legacy analog systems into more advanced IP based products.
In order to broaden the Company's existing product offering and to meet this
expected demand the Board is actively seeking to acquire companies which offer
telecommunication over IP products and technologies aimed at the enterprise and
corporate markets.
The Company intends to become a "one stop shop" by being able to provide a
portfolio of IP based communications products.
Emblaze V CON, which specialises in the provision of corporate video
conferencing solutions over IP to its global blue chip customer base, is the
Company's first acquisition as part of this growth strategy.
Board Changes
Following the announcement on 21 September 2006 in which the Company announced
it had relieved Mr Moshe Leder of his duties as chief executive of Emblaze V
CON. Late on 28 Sepetmber 2006, the Company received Mr Moshe Leder's
resignation from his position as a director of the Company and as director of
Emblaze V CON.
Summary
The half year results represent a period in which the Company's activities were
being restructured and are not indicative of future trading activities. The
Company has discontinued the card operations and following the acquisition of
Emblaze VCON is now developing and selling advanced video conferencing over-IP
solutions and technology.
Commenting on the results Hans Wagner, Chairman of Zone-IP, said:
"This is the beginning of a new direction for the Company. We have a clear
vision of being able to offer multiple IP products and solutions to the global
enterprise markets. There is a strong demand for applications running over IP
including simple phone call management and sophisticated multi-point remote
sites video communication. We have a strong team that understands the market and
are capable of identifying suitable acquisition targets in order that we can
build an IP applications company serving the corporate market. By seeking to
build such a group my fellow directors and I are confident we can increase
shareholder value.
Hans Wagner
Chairman
29 September 2006
CONSOLIDATED BALANCE SHEETS AS AT 30 JUNE 2006
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 883 15,540 3,899
Short-term available-for-sale
marketable securities 3,081 - 2,035
Trade receivables 11 116 469
Other accounts receivable and
prepaid expenses 210 188 102
Inventories - 266 295
--------- --------- ----------
Total current assets 4,185 16,110 6,800
--------- --------- ----------
LONG-TERM AVAILABLE-FOR-SALE
MARKETABLE SECURITIES 5,975 - 6,438
--------- --------- ----------
SEVERANCE PAY FUND 85 59 122
--------- --------- ----------
PROPERTY AND EQUIPMENT, NET 74 198 272
--------- --------- ----------
Total assets 10,319 16,367 13,632
========= ========= ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit - - 53
Trade payables 130 134 592
Deferred revenues - - 125
Other accounts payable and
accrued expenses 239 276 201
--------- --------- ----------
Total current liabilities 369 410 971
--------- --------- ----------
ACCRUED SEVERANCE PAY 109 89 152
--------- --------- ----------
EQUITY:
Share capital:
Ordinary shares of NIS 0.01 par
value: Authorised: 30,000,000
shares at 31December 2005 and
30June 2006; Issued and
outstanding: 20,395,101 shares at
31December 2005 and 20,448,101
shares at 30 June 2006. 43 43 43
Additional paid-in capital 20,219 20,279 20,218
Net unrealized loss reserve (53) - (18)
Accumulated deficit (10,368) (4,454) (7,734)
--------- --------- ----------
Total equity 9,841 15,868 12,509
--------- --------- ----------
Total liabilities and equity 10,319 16,367 13,632
========= ========= ==========
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED 30 JUNE 2006
Six months Six months Year
ended ended ended 31
30 June 30 June December
2006 2005 2005
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Revenues 251 357 913
Cost of revenues (Including write
down of inventory in the amount
of $805, $0 and $295 on 31
December 2005 and 30 June 2005
and 2006, respectively) 771 296 1,614
----------- ---------- ---------
Gross (loss)/profit (520) 61 (701)
----------- ---------- ---------
Operating expenses:
Research and development 626 773 1,642
Sales and marketing 1,037 310 1,727
General and administrative 535 404 768
----------- ---------- ---------
Total operating expenses 2,198 1,487 4,137
----------- ---------- ---------
Operating loss (2,718) (1,426) (4,838)
Capital loss (198) - -
Financial income 327 67 286
Financial expenses (45) (713) (800)
----------- ---------- ---------
Net loss (2,634) (2,072) (5,352)
=========== ========== =========
Basic and diluted net loss per
share (0.13) (0.10) (0.43)
=========== ========== =========
Weighted average number of shares
used in computing basic and
diluted net loss per share 20,401,657 20,395,101 12,433,930
=========== ========== =========
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Additional Net Accumulated Total Total
capital paid-in unrealised deficit recognised
capital loss reserve expenses
$'000 $'000 $'000 $'000 $'000 $'000
Balance as of
1January 2005 10 2,395 - (2,382) 23 (1,504)
========
Issuance of
Preferred A-1
shares -1 97 - - 97
Exercise of
warrants to
Preferred B
shares 1 811 - 812
Issuance of
Preferred C
shares, net
of issuance
expenses 1 491 - - 492
Share based
compensation
related to
options issued
to employees - 15 - - 15
Bonus shares
effected as
share split 8 (8) - - -
Issuance of
Ordinary
shares, net
of issuance
expenses2 23 16,417 - - 16,440
Net losses on
available-for-
sale financial
assets - - (18) - (18) (18)
Net loss - - - (5,352) (5,352) (5,352)
------- --------- --------- --------- ------- --------
Balance as of
31December
2005 43 20,218 (18) (7,734) 12,509 (5,370)
========
Share based
compensation
related to
options issued
to employees - (10) - - (10) -
Exercise of
options - 11 - - 11 -
Net losses on
available-for-
sale financial
assets - - (35) - (35) (35)
Net loss - - - (2,634) (2,634) (2,634)
------- --------- --------- --------- ------- --------
Balance as of
30June 2006
(unaudited) 43 20,219 (53) (10,368) 9,841 (2,669)
======= ========= ========= ========= ======= ========
1 Represents an amount less than $1.
2 Net of issuance expenses of $2,452 in 2005
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Cash flows from operating activities:
Net loss (2,634) (2,072) (5,352)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 44 22 44
Capital loss 198 - -
Stock based compensation (10) 7 15
Increase/(decrease) in trade and
other accounts receivable and
prepaid expenses 350 (250) (517)
Decrease/(increase) in inventories 295 (1) (30)
(Decrease)increase in trade and
other accounts payable and accrued
expenses (424) (183) 215
(Decrease)/Increase in deferred
revenues (125) - 125
Accrued severance pay, net (6) 2 -
----------- --------- ---------
Net cash used in operating
activities (2,312) (2,475) (5,500)
----------- --------- ---------
Cash flows from investing activities:
Investment in available-for-sale
marketable securities (618) - (8,491)
Purchase of property and
equipment, net (44) (37) (133)
----------- --------- ---------
Net cash used in investing activities (662) (37) (8,624)
----------- --------- ---------
Cash flows from financing activities:
Short-term bank credit, net (53) (3) 50
Proceeds from issuance of shares and
warrants, net - 17,923 17,841
Exercise of options 11 - -
----------- --------- ---------
Net cash (used in)/provided
by financing activities (42) 17,920 17,891
----------- --------- ---------
(Decrease)/Increase in cash
and cash equivalents (3,016) 15,408 3,767
Cash and cash equivalents at
the beginning
of the period 3,899 132 132
----------- --------- ---------
Cash and cash equivalents at
the end of the period 883 15,540 3,899
=========== ========= =========
Supplemental disclosure of cash flows
activities:
Cash received during the period for:
Interest 327 67 286
=========== ========= =========
Non-cash activities:
Share dividend effected as
share split - 8 -
=========== ========= =========
Issuance expenses - 13 -
=========== ========= =========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL
a. These financial statements have been prepared as of 30 June 2006 and for
the six months then ended. These financial statements are to be read in
conjunction with the audited annual financial statements of the Company as
of 31 December 2005 and their accompanying notes.
b. At the end of May 2006, the Company signed an agreement with Emblaze V Con
Ltd. ("EVC") and its shareholders under which the Company was to acquire
EVC in exchange for the issuance of shares that will represent 60 per cent.
of the outstanding shares of the Company immediately following the
consummation of the agreement with EVC's shareholders.
The consummation of the agreement was approved by the shareholders of Ki-Bi
at the annual general meeting ("AGM") of the Company that took place on 12
July 2006. Due to the size of EVC in relation to the size of the Company,
the acquisition constituted a reverse takeover under the London Stock
Exchange Rules and therefore required the prior approval of the AGM.
As part of a reorganisation and the negotiations for the acquisition of
EVC, in April 2006, the Company's Board of Directors decided to cease the
current Ki-Bi cards operations. As part of the decision, the employment of
17 employees including the Company's CEO and CFO was terminated and
write-off of inventory in the amount $295.
c. In July 2006, the Company changed its name from Ki-Bi Mobile Technologies
Ltd to Zone-IP Ltd.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies and methods of computation applied in the
preparation of the interim financial information are the same as those applied
in the annual financial statements of the Company as of 31 December 2005.
This financial information have been prepared in a condensed format as of 30
June 2006 and for the six months then ended ("interim financial information").
This financial information should be read in conjunction with the Company's
audited annual financial statements and accompanying notes as of 31 December
2005 and for the year then ended. Operating results for the six-month period
ended 30 June 2006 are not necessarily indicative of the results that may be
expected for the year ended 31 December 2006.
NOTE 3:- FINANCIAL STATEMENTS IN U.S. DOLLARS
a. The financial statements are prepared in accordance with International
Financing Reporting Standards ("IFRS").
b. Foreign currency translation:
The majority of the Company's sales are made outside Israel in non Israeli
currencies, mainly the U.S. dollar and GBP. A substantial portion of the
Company's expenses, mainly selling and marketing expenses and production
costs is incurred in or linked to U.S. dollars. The financing of the
Company is in U.S. dollars. Therefore, the Company has determined that the
U.S. dollar is the currency of the primary economic environment of the
Company, and thus its functional and reporting currency.
Assets and liabilities in or linked to non-U.S. dollar currencies are
included in the financial statements according to the representative
exchange rate as published by the Bank of Israel on balance sheet date.
NOTE 4:- LOSS PER SHARE
The calculation of loss per share is based on the loss attributable to ordinary
shareholders of $2,634,000 (2005: $2,072,000) divided by the weighted average
number of shares in issue during the year, being 20,401,657 (2005: 20,395,101)
shares.
NOTE 5:- DIVIDENDS
No dividend is proposed for the six months ended 30 June 2006.
COPIES OF THE INTERIM FINANCIAL STATEMENTS
Copies of the interim financial statements will be available to shareholders at
the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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