(AMP.L) Amphion Innovations PLC Buy/Sell

RNS Number : 6228I
  Amphion Innovations PLC
  16 March 2010
   

Amphion Innovations plc

Preliminary Results for the year to 31 December 2009

Amphion Innovations plc (LSE: AMP) ("Amphion" or "the Company"), which builds shareholder value in high growth companies in the medical and technology sectors, today announces its preliminary results for year ended 31 December 2009.

Highlights

Trading and financial performance

·      Revenue increased by 22% to US $8.6 million in 2009 (2008: US $7.1 million)

·      Gross profit increased by almost 70% to US $5.8 million (2008: US $3.4 million)

·      NAV per Share broadly flat at US $0.42 (2008: US $0.44)

·      Operating loss narrowed to US $892,937 (2008: US $3.4 million loss)

·      Loss for the year increased to US $2.9 million primarily due to reduction of fair value of investments of US $1.8 million (2008: US $1.2 million primarily as a result of fair value increase on investments of US $2.0 million)

·      Net cash generated from operating activities US $1.7 million (2008: US $2.4 million negative)

·      Additional US $4.2 million raised through issue of Convertible Promissory Note 

Intellectual property (IP)

·      First full year of income from IP licensing

·      Revenue generated from IP licensing rose 40% to US $7.6 million in 2009 

·      Increased scope of future licensing income with successful re-examination of '502 patent

·      Large number of potential licensees identified

·      IP assets are carried at amortised cost and their full value is not reflected in the NAV

·      Examining options to further capitalise on IP income

Partner Companies

·      Post year end, Kromek completed the oversubscribed Series D financing of £12.3 million 

·      Axcess reports record revenues of US $4.9 million 

·      Myconostica raised £1.75 million in a Series D financing

·      Positive preclinical study results of WellGen's proprietary black tea extract advances lead medical food into the final phase of clinical development 

Richard C.E. Morgan, Amphion's Chief Executive Officer said:

'Alongside the continued progress made by our Partner Companies, a key achievement in 2009 has been the successful development of a significant secondary revenue stream through our IP licensing and development subsidiary, DataTern. This has been achieved by the signing of 14 new licenses with leading international companies and we are pursuing further licenses from a number of other large corporations.  Income from IP has enabled the business to offset a more challenging environment for capital raisings and equally importantly has served to highlight the importance and value of IP throughout our business. 

'Our Partner Companies all made good progress during the year.  Kromek, in particular, had a very successful period culminating in a significantly oversubscribed fund raising in January 2010. Looking ahead, we will seek to maximise the potential of the IP licensing programme, alongside raising new capital which together will enable us to add value to our Partner Companies and support their continued development."

Enquiries

Amphion Innovations                                                   +1 212 210 6224

Charlie Morgan

Cardew Group                                                             +44 020 7930 0777

Tim Robertson/ Jamie Milton/ Daniela Cormano

Charles Stanley Securities, Nominated Advisor          +44 020 7149 6000

Mark Taylor

Chairman and CEO's Statement

Results

Amphion continued to make progress in 2009. The continued success of our intellectual property (IP) licensing programme has been a critical factor in getting the Company to narrow its operating loss for the year and to enable us to raise additional capital through the issue of the Convertible Promissory Note (CPN).  It is very gratifying that in the last two years Amphion has essentially established a strong second leg to our business with the IP licensing programme, which is driving a significant change in our operating and financial profile.  

Revenue generated from IP licensing rose 40% to US $7.6 million in 2009.  As a result of the success of the licensing programme, Amphion's total revenue increased by 22% to US $8.6 million in 2009 (2008: US $7.1 million) and gross profit increased by almost 70% to US $5.8 million (2008: US $3.4 million).  Since our IPO in 2005 our revenue has increased by 76% per annum compound.  As a result the total loss from operations narrowed from US $3.4 million in 2008 to US $892,937 in 2009.   

Our reported Net Asset Value (NAV) per Share was US $0.42 as at 31 December 2009 compared to US $0.44 in 2008 and has remained in the US $0.40 to US $0.45 per Share range for about the last two years.  Since Amphion's IPO in 2005 the NAV per Share has grown by 16.1% per annum compound from US $0.22 to US $0.42. Certain of our individual holdings of equity may be revalued in a new round of financing and those changes may be downward compared with most recent valuations.  However, in this eventuality the overall impact on our NAV per Share is likely to be moderated by our holdings of convertible debt and by other assets in the Partner Companies that we do not believe would be impacted in this way.  It should also be noted that Amphion's holding of intellectual property assets, which are valued at amortised cost, are producing sizable levels of gross income which we believe will continue in the future and could lead to an increase in value. While their progress has been slowed by the market environment, none of the Partner Companies is standing still and we expect to see significant growth in the years ahead.

Intellectual Property Licensing Programme

Amphion's IP licensing programme made good progress over the course of 2009.  Amphion's wholly-owned subsidiary, DataTern, Inc., signed additional non-exclusive intellectual property license agreements with 14 leading international companies over the year, bringing the total number of licensees of the ORM technology to 18.  

As we reported in our Interim Statement in August we were delighted to learn that the US Patent and Trademark Office (the USPTO) had given notice of the positive outcome of the reexamination of the second of our two key patents, what we call the '502 patent.  Up to that time, our licensing activity was focused mainly on the second of these two patents, the '402 patent.  It is a major accomplishment getting the '502 patent successfully through the reexamination process, not only with all 18 original claims intact but with 26 new ones added.  We are only just now starting to approach potential licensees about a license to '502, although all companies that have already settled with us have obtained a fully paid-up license to both these two patents.   Our confidence in the fundamental strength of this technology and IP is even stronger now than it was one year ago.

Over the past seven years that we have been developing our capabilities in this area, we have established a solid second leg to our business, which we expect to continue to grow and have a positive impact on our primary business.  Until June of 2008, we were investing in these capabilities and most of the costs associated with establishing this business have been expensed as incurred.  Even today, despite the continued success of this programme, only about US $1.3 million of value is shown in our balance sheet (and Net Assets) for our intellectual property assets due to the fact that they are accounted for at amortised cost.  Like much of the IP underlying our Partner Companies, we believe the ORM patents are fundamental and important and that many companies managing complex data in an IT setting should require a license to the technology to continue to "practice the art".  We believe that there remain a very large number of additional potential licensees and that we should be able to generate a significant amount of revenue from this asset over the next few years.  In due course, once Amphion has recovered its sunk costs, we will start sharing this revenue stream with FireStar (where the ORM technology and patents were originally developed), so FireStar should then benefit directly as well.  Our longer term goal is to develop our IP licensing activities further, beyond the ORM technology programme, to support additional licensing programmes in the future.

Key Role of IP Management in the Amphion Model

Our basic business model remains unchanged:  we remain committed to starting and building high potential companies based on innovative and proprietary but basically proven technology.  Each one of our companies is carefully selected to address established markets in excess of US $1 billion and to have target exit values in excess of US $100 million.  Our ability to select good IP and to develop the IP portfolios in each of our Partner Companies is a critical success factor and is getting steadily stronger as we deepen our knowledge and experience in this area.  This underpins Amphion's investment in each Partner Company at the outset and as it develops.

Kromek is a case in point where we remain excited by the business potential.  There is an urgent need for products that apply innovative technology to security, industrial and medical applications where solutions are sorely needed and current technology does an inadequate job.  But Kromek is also a particularly good case study of our general approach to the growth of IP portfolios.  In 2005, when we were initially evaluating a commitment to Kromek, it had one (important) process patent.  Today it has over fifty patents covering many different aspects of multispectral x-ray detection and imaging and the number continues to grow rapidly.  

We are excited by the company's progress and prospects, but Kromek is not unique.  We are taking the same systematic approach to developing the IP portfolio of each one of our companies.   In each case our primary goal remains the same:  to develop a sound business that is very valuable as an IPO or to an acquirer.  However, in the final analysis, if the company is not able to succeed as a business, a really distinguished IP portfolio can provide a valuable insurance policy for the investors.  In those circumstances Amphion's ability to monetise such an IP portfolio is an important strategic asset for the company, as evidenced by the growing revenue stream from the IP licensing programme.

Amphion in the Middle East

We believe the Middle East is now beginning to see the first signs of recovery from the recent financial crisis and economic conditions, particularly in those countries that enjoy an abundance of oil and gas reserves, including Kuwait, Qatar, Abu Dhabi, and Saudi Arabia.  A number of projects are currently under development and in November, Amphion signed a partnership agreement with Kuwait University, the State's first and oldest University.  This agreement is aimed at establishing and operating a Technology Transfer Unit (TTU) at the University, which will be the first in-house TTU in Kuwait.  Our presence in the region and our projects are being carefully selected to benefit Amphion as a whole and our Partner Companies in particular.

Prospects for 2010 and Beyond

We expect our IP licensing programme to be a key source of financial support for the Company and complement the completion of the CPN issue, which stood at £4.9 million (US $7.5 million) at the year end.  Since then an additional £850,000 has been issued bringing the total to £5.7 million.  The goal is to issue up to £7 million (US $11 million) of CPN.  If we manage to meet our revenue generation objectives, Amphion should be able to cover most, if not all, of its direct operating costs, including the cost of servicing the coupon on the CPN.  In parallel with completing the issue of CPN, we are actively exploring alternative ways of raising capital and providing additional resources for our Partner Companies.  We hope to be able to report on these initiatives as the year progresses.  

For our business model to work we need continuous access to capital.  Capital for early stage emerging technology companies remained very scarce throughout 2009.  For the broader economic recovery to make a positive impact on Amphion, we need to see a return of a viable IPO market.  We continue to believe that a number of our companies should be ready to approach the IPO market as and when it revives but we believe that conditions will improve slowly, if at all, during 2010.

While we remain cautious, we believe in the strength of our model and the quality of our Partner Companies.  We are focused on driving revenues from our IP programme which together with the completion of the CPN issue will mean we can continue to add value to our Partner Companies and, through our significant shareholdings in each one, build a large amount of value for our Amphion shareholders.

Below we provide a summary of progress made with each of our Partner Companies during 2009.

Axcess International, Inc. became profitable in the first half of 2009, achieving record year end revenues in 2009 of US $4.9 million, as it implemented its comprehensive security system based on the successful delivery of a port personnel security contract valued at US $3.2 million in Trinidad and Tobago.  The company successfully signed and announced a product and marketing partnership with Assay Abloy's HID access control division to embed proximity access control codes into Axcess' Dot Wireless Credential product which will be introduced into the market in Q1 2010. 

FireStar Software, Inc. extended its successful partnership with OMG to include OMG MDMI Labs, to further accelerate the adoption of the MDMI Standard.  FireStar also developed a partnership with Southeast Michigan Health Information Exchange in order to assist them in building their Information Exchange and is working with the European and US patent offices to clarify and enhance existing EdgeNode* patent applications.

Kromek launched its second product in June 2009, the 311+ Scanner, at the TranSec World Expo in Amsterdam, intended to scan for liquids in quart sized bags as well as a variety of bottles in airport security.  Kromek was also awarded a US $4 million contract from the US Defense Threat Reduction Agency for the development of Detectors from Vapour Growth Cadmium Zinc Telluride material and completed the UK Government contract for developing new generation baggage scanning systems. In addition, over the course of the year, Kromek's first product, the Bottle Scanner, underwent successful trials at Newcastle Airport.  Post year end, Kromek completed the oversubscribed J round of its Series D financing of £12.3 million.  

m2m Imaging Corp. grew its business by 18%, in 2009, expanding its B2B supply relationships with Siemens Molecular Imaging, Varian, Mediso Medical Imaging, and Scanco of Switzerland to provide key components and accessories for their imagers, while also expanding its direct sales to end-user customers. 

Motif BioSciences, Inc.'s partnership with Imperial College London and Professor Philippe Froguel began to yield results.  Currently, these discoveries include specific genetic associations with type 2 diabetes, obesity, hypertension, and dyslipidemia.  Motif also applied to the Qatar National Research Fund for funding of an ambitious study of the genetics of response to metformin and expanded its discussions to partner with and initiate research projects with a variety of companies and international academic medical centres in the areas of target gene discovery, biomarker discovery, biomarker development, prospective pharmacogenomics, and drug re-profiling.  

Myconostica, Ltd.achieved the CE marking for and completed updating of its Aspergillus assay and commenced sale in Europe of the 2nd generation MycAssayTM Aspergillus product.  During August 2009, Myconostica successfully raised £1.75 million in a Series D financing.  In January 2010, the company received a license from Health Canada for the sale of MycAssayTM Aspergillus and MycAssayTM Pneumocystis, and appointed as exclusive distributers Inverness Medical Canada for Canada, along with Bactus AB for Sweden and Finland.  During January 2010 Myconostica also launched a new version of MycAssayTM Pneumocystis, with improved clinical performance and increased analytical sensitivity. 

PrivateMarkets, Inc. built upon its Q4 2008 launch in the Texas electricity market throughout 2009 with growth in trading volumes of its platform exceeding expectations leading to a 25% increase in the customer base by the close of the year. The company has initiated discussions with the Chicago Mercantile Exchange regarding the addition of clearing services that will position the product for expansion into other regional markets in 2010.  

WellGen, Inc.introduced its first commercial products range in 2009 under the brand name TeAm? a line of natural food supplements that address important health needs of baby boomers: joint health, stress management, immune defense, and exercise nutrition.  WellGen signed a Memorandum of Understanding with RFI Ingredients to collaborate on a range of opportunities to create and market therapeutic nutrition products.  Finally, during 2009, a preclinical study of WellGen's proprietary black tea extract concentrate demonstrated that it significantly improves glucose control including the measure of HbA1c, thereby advancing the company's lead medical food into the final phase of clinical development for diabetes.

 Amphion Innovations plc                                                        
 Consolidated statement of comprehensive income                                 
 For the year ended 31 December                                                 
 2009                                                                           
                                                                                
                                                                                
                                                                                
                                                                                
                                              Notes                             
                                                                    Year ended                 Year ended
                                                              31 December 2009           31 December 2008
 Continuing operations                                                    US $                       US $
                                                                                
 Revenue                                           4                                            7,087,944
                                                          8,658,271             
 Cost of sales                                                                                
                                                          (2,867,253)             (3,676,250)
 Gross profit                                                                                   3,411,694
                                                          5,791,018             
                                                                                
 Other operating income                                                                              
                                                              -                   7,000
 Administrative expenses                                                                      
                                                          (6,683,955)             (6,799,792)
                                                                                
 Operating loss                                                                               
                                                          (892,937)               (3,381,098)
                                                                                
 Fair value (losses)/gains on                                                                   1,967,216
 investments                                              (1,792,349)           
 Interest income                                   8                                              274,788
                                                          415,780               
 Other gains and losses                                                                           
                                                          (5,377)                 (22,433)
 Finance costs                                     9                                              
                                                          (332,722)               (29,878)
                                                                                
 Loss before tax                                   6                                          
                                                          (2,607,605)             (1,191,405)
                                                                                
 Tax on loss                                      10                                              
                                                          (350,005)               (13,130)
                                                                                
 Loss for the year                                                                            
                                                          (2,957,610)             (1,204,535)
                                                                                
 Other comprehensive income                                                     
                                                                                
 Exchange differences arising                                                   
 on translation                                                                 

of foreign operations                                                                         
                                                          24,431                  (41,248)
                                                                                
 Other comprehensive income/(loss) for the                                                        
 year                                                     24,431                  (41,248)
                                                                                
 Total comprehensive loss for                                                                 
 the year                                                 (2,933,179)             (1,245,783)
                                                                                
                                                                                
                                                                                
                                                                                
 Earnings per share                               11                            
                                                                                
 Basic                                                US   $                       $                 
                                                          (0.02)                  (0.01)
                                                                                
 Diluted                                              US   $                       $                 
                                                          (0.02)                  (0.01)
                                                                                

 Amphion Innovations plc                                           
 Company statement of comprehensive                                
 income                                                            
 For the year ended 31 December                                    
 2009                                                              
                                                                   
                                                                   
                                                                   
                                                                   
                                                       Year ended                         Year ended
                                  Notes          31 December 2009                   31 December 2008
                                                             US $                               US $
 Continuing operations                                             
                                                                   
                                                                   
 Administrative expenses                                                             (2,464,160)
                                             (2,362,301)           
                                                                   
 Operating loss                                                                      (2,464,160)
                                             (2,362,301)           
                                                                   
 Fair value (losses)/gains on                                                         1,665,716
 investments                                 (1,554,053)           
 Interest income                    8                                                    314,445
                                             413,751               
 Other gains and losses                                                                   (22,433)
                                             (5,377)               
 Finance costs                      9                                                     (26,229)
                                             (322,173)             
                                                                   
 Loss before tax                    6                                                   (532,661)
                                             (3,830,153)           
                                                                   
 Tax on loss                        10                                                           -  
                                                 -                 
                                                                   
 Loss for the year                                                                      (532,661)
                                             (3,830,153)           
                                                                   
                                                                   
 Other comprehensive income for                                                                  -  
 the year                                        -                 
                                                                   
 Total comprehensive loss for                                                           (532,661)
 the year                                    (3,830,153)           
                                                                   
                                                                   

 Amphion Innovations plc
 Consolidated statement of financial position
 At 31 December 2009

                                             Notes          31 December 2009              31 December 2008
                                                                        US $                          US $

 Non-current assets
 Intangible assets                              12                                            2,150,415
                                                        1,269,034
 Property, plant and equipment                  13                                                 19,726
                                                        15,624
 Security deposit                                                                                121,694
                                                        70,735
 Investments                                    15                                           59,029,932
                                                        60,938,995
                                                                                             61,321,767
                                                        62,294,388

 Current assets
 Prepaid expenses and other                     16                                            1,566,911
 receivables                                            1,701,914
 Cash and cash equivalents                                                                       630,404
                                                        3,266,221
                                                                                              2,197,315
                                                        4,968,135

 Total assets                                                                                63,519,082
                                                        67,262,523

 Current liabilities
 Trade and other payables                   16, 17                                            1,952,779
                                                        4,390,924

 Non-current liabilities
 Convertible promissory notes                   18                                            3,279,950
                                                        7,518,290
 Trade and other payables                   16, 17                                            1,140,739
                                                           -  
                                                                                              4,420,689
                                                        7,518,290

 Total liabilities                                                                            6,373,468
                                                        11,909,214

 Net assets                                                                                  57,145,614
                                                        55,353,309

 Equity
 Share capital                                  19                                            2,429,342
                                                        2,457,657
 Share premium account                                                                       36,291,262
                                                        37,403,821
 Translation reserve                                                                              (38,388)
                                                        (13,957)
 Retained earnings                                                                           18,463,398
                                                        15,505,788

 Total equity                                                                                57,145,614
                                                        55,353,309

 The financial statements were approved by the Board of Directors and authorised for issue on
 15 March 2010.  They were signed on its behalf
 by:

 Director                                 Director
 Richard M. Mansell-Jones              Robert J. Bertoldi

 Amphion Innovations plc                                                     
 Company statement of financial                                              
 position                                                                    
 At 31 December 2009                                                         
                                                                             
                                                                             
                                                                             
                                    Notes                  31 December 2009             31 December 2008
                                                                        US$                          US$
                                                                             
 Non-current assets                                                          
 Property, plant and equipment        13                                                           2,397
                                                           -                 
 Security deposit                                                                               121,694
                                                       70,735                
 Investments                          15                                                   58,397,156
                                                       59,044,515            
 Investment in subsidiaries           14                                                        643,467
                                                       1,915,518             
                                                                                           59,164,714
                                                       61,030,768            
                                                                             
 Current assets                                                              
 Prepaid expenses and other           16                                                     1,748,986
 receivables                                           1,971,692             
 Cash and cash equivalents                                                                      538,018
                                                       1,411,079             
                                                                                             2,287,004
                                                       3,382,771             
                                                                             
 Total assets                                                                              61,451,718
                                                       64,413,539            
                                                                             
                                                                             
 Current liabilities                                                         
 Trade and other payables           16, 17                                                      638,087
                                                       2,078,479             
                                                                             
 Non-current liabilities                                                     
 Convertible promissory notes         18                                                     3,279,950
                                                       7,518,290             
 Trade and other payables           16, 17                                                        27,632
                                                           -                 
                                                                                             3,307,582
                                                       7,518,290             
                                                                             
 Total liabilities                                                                           3,945,669
                                                       9,596,769             
                                                                             
 Net assets                                                                                57,506,049
                                                       54,816,770            
                                                                             
 Equity                                                                      
 Share capital                        19                                                     2,429,342
                                                       2,457,657             
 Share premium account                                                                     36,291,262
                                                       37,403,821            
 Retained earnings                                                                         18,785,445
                                                       14,955,292            
                                                                             
 Total equity                                                                              57,506,049
                                                       54,816,770            
                                                                             
                                                                             
                                                                             
 The financial statements were approved by the Board of Directors and        
 authorised                                                                  
 for issue on 15 March 2010.  They were signed on its behalf by:             
                                                                             
                                                                             
                                                                             
 Director                                                          Director  
 Richard M. Mansell-Jones                              Robert J. Bertoldi    

 Amphion Innovations plc                                                                                       
 Consolidated statement of changes in equity                                                                   
 For the year ended 31 December 2009                                                                           
                                                                                                               
                                                                                                               
                                                                                                               
                                                                                                               
                                                                     Share                                     
                                                   Share           premium       Translation         Retained  
                                    Notes        capital           account           reserve         earnings             Total
                                                    US $              US $              US $             US $              US $
                                                                                                               
 Balance at 31 December 2007                   2,388,071        34,772,046             2,860       19,667,933        56,830,910
                                                                                                               
 Loss for the year                                   -                 -             -            (1,204,535)       (1,204,535)
                                                                                                               
 Other comprehensive loss for                     -                    -            (41,248)          -                (41,248)
 the year                                                                                                      
                                                                                                               
 Total comprehensive loss for                     -                -                (41,248)      (1,204,535)      (1,245,783)
 the year                                                                                                      
                                                                                                               
 Issue of share capital              19           41,271           859,444           -                -                 900,715
                                                                                                               
 Incremental costs directly                                                                                    
 attributable                                                                                                  

to issue of shares              20          -                (41,423)           -                -                (41,423)
                                                                                                               
 Recognition of share-based          22          -                 701,195           -                -                 701,195
 payments                                                                                                      
                                                                                                               
 Balance at 31 December 2008                   2,429,342        36,291,262          (38,388)       18,463,398        57,145,614
                                                                                                               
 Loss for the year                                   -                 -             -            (2,957,610)       (2,957,610)
                                                                                                               
 Other comprehensive income for the               -                    -             24,431           -                  24,431
 year                                                                                                          
                                                                                                               
 Total comprehensive loss for                     -                 -                24,431       (2,957,610)      (2,933,179)
 the year                                                                                                      
                                                                                                               
 Issue of share capital              19           28,315           306,807           -                -                 335,122
                                                                                                               
 Recognition of share-based          22          -                 805,752           -                -                 805,752
 payments                                                                                                      
                                                                                                               
 Balance at 31 December 2009                   2,457,657        37,403,821          (13,957)       15,505,788        55,353,309
                                                                                                               
                                                                                                               

 Amphion Innovations plc                                                                          
 Company statement of changes in                                                                  
 equity                                                                                           
 For the year ended 31 December                                                                   
 2009                                                                                             
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                         Share                    
                                                    Share              premium          Retained  
                                 Notes            capital              account          earnings             Total
                                                     US $                 US $              US $              US $
                                                                                                  
 Balance at 31 December 2007                    2,388,071           34,772,046        19,318,106        56,478,223
                                                                                                  
 Loss for the year                                    -                    -           (532,661)         (532,661)
                                                                                                  
                                                                                                  
 Total comprehensive loss for                    -                   -                 (532,661)         (532,661)
 the year                                                                                         
                                                                                                  
 Issue of share capital             19             41,271              859,444           -                 900,715
                                                                                                  
 Incremental costs directly                                                                       
 attributable                                                                                     

to issue of shares             20           -                    (41,423)           -                (41,423)
                                                                                                  
 Recognition of share-based         22           -                     701,195           -                 701,195
 payments                                                                                         
                                                                                                  
 Balance at 31 December 2008                    2,429,342           36,291,262        18,785,445        57,506,049
                                                                                                  
 Loss for the year                                    -                    -        (3,830,153)        (3,830,153)
                                                                                                  
                                                                                                  
 Total comprehensive loss for                         -                    -        (3,830,153)       (3,830,153)
 the year                                                                                         
                                                                                                  
 Issue of share capital             19             28,315              306,807           -                 335,122
                                                                                                  
 Recognition of share-based         22           -                     805,752           -                 805,752
 payments                                                                                         
                                                                                                  
 Balance at 31 December 2009                    2,457,657           37,403,821        14,955,292        54,816,770
                                                                                                  

 Amphion Innovations plc                                                       
 Consolidated cash flow                                                        
 statement                                                                     
 For the year ended 31 December                                                
 2009                                                                          
                                                                               
                                                                               
                                                                               
                                                                   Year ended              Year ended
                                        Notes                31 December 2009        31 December 2008
                                                                         US $                    US $
                                                                               
 Operating activities                                                          
                                                                               
 Operating loss                                                                              
                                                         (892,937)               (3,381,098)
                                                                               
 Adjustments for:                                                              

Depreciation of property,             13                                                       
 plant and equipment                                     10,296                  11,836

Amortisation of intangible            12                                                     
 assets                                                  87,520                  253,935

Adjustment to intangible              12                                                         
 assets                                                  793,861                     -  

Recognition of share based                                                                
 payments                                                1,140,874               1,103,235

Increase in prepaid & other                                                                 
 receivables                                             (135,003)               (927,482)

Decrease in security                                                                             
 deposit                                                 50,959                      -  

Increase in trade & other                                                                    
 payables                                                1,297,406               623,776

Interest expense                                                                              
                                                         (332,722)               (29,878)

Income tax                                                                                    
                                                         (350,005)               (13,130)
                                                                               
 Net cash from (used in)                                                                     
 operating activities                                    1,670,249               (2,358,806)
                                                                               
 Investing activities                                                          
                                                                               
 Interest received                                                                               
                                                         415,780                 274,788
 Proceeds from repayment of                                                                      
 notes                                                   160,000                 495,890
 Purchases of investments                                                                    
                                                         (3,861,412)             (5,915,881)
 Purchases of intangible assets           12                                                    
                                                             -                   (129,714)
 Purchases of equipment                   13                                                       
                                                         (5,774)                 (4,173)
 Acquisition of subsidiary                                                                           
                                                         19,824                      -  
                                                                               
 Net cash used in investing                                                                  
 activities                                              (3,271,582)             (5,279,090)
                                                                               
 Financing activities                                                          
                                                                               
 Proceeds on issue of shares, net of share issuance                                              
 costs                                                       -                   457,252
 Proceeds on issue of                                                                         
 convertible promissory notes                            4,238,340               3,279,950
                                                                               
 Net cash from financing                                                                      
 activities                                              4,238,340               3,737,202
                                                                               
 Net increase/(decrease) in                                                                  
 cash and cash equivalents                               2,637,007               (3,900,694)
                                                                               
 Cash and cash equivalents at                                                                 
 the beginning of the year                               630,404                 4,594,007
                                                                               
 Effect of foreign exchange                                                                       
 rate changes                                            (1,190)                 (62,909)
                                                                               
 Cash and cash equivalents at                                                                    
 the end of the year                                     3,266,221               630,404
                                                                               

 Amphion Innovations plc                                                       
 Company cash flow statement                                                   
 For the year ended 31 December                                                
 2009                                                                          
                                                                               
                                                                               
                                                                               
                                                                               
                                                                   Year ended              Year ended
                                        Notes                31 December 2009        31 December 2008
 Operating activities                                                    US $                    US $
                                                                               
 Operating loss                                                                              
                                                         (2,362,301)             (2,464,160)
                                                                               
 Adjustments for:                                                              

Depreciation of property,             13                                                        
 plant and equipment                                     2,397                   4,488

Recognition of share based                                                                
 payments                                                1,140,874               1,103,235

Increase in prepaid & other                                                              
 receivables                                             (222,706)               (1,369,406)

Decrease in security                                                                             
 deposit                                                 50,959                      -  

Increase in trade & other                                                                      
 payables                                                1,412,760               77,670

Interest expense                                                                              
                                                         (322,173)               (26,229)
                                                                               
 Net cash used in operating                                                                  
 activities                                              (300,190)               (2,674,402)
                                                                               
 Investing activities                                                          
                                                                               
 Interest received                                                                               
                                                         413,751                 314,445
 Purchases of investments                                                                    
                                                         (3,861,412)             (6,792,941)
 Proceeds from repayment of                                                                   
 notes                                                   387,949                 1,495,890
                                                                               
 Net cash used in investing                                                                  
 activities                                              (3,059,712)             (4,982,606)
                                                                               
 Financing activities                                                          
                                                                               
 Proceeds on issue of shares, net of share issuance                                              
 costs                                                       -                   457,252
 Proceeds on issue of                                                                         
 convertible promissory notes                            4,238,340               3,279,950
                                                                               
 Net cash from financing                                                                      
 activities                                              4,238,340               3,737,202
                                                                               
 Net increase/(decrease) in                                                                  
 cash and cash equivalents                               878,438                 (3,919,806)
                                                                               
 Cash and cash equivalents at                                                                 
 the beginning of the year                               538,018                 4,480,257
                                                                               
 Effect of foreign exchange                                                                       
 rate changes                                            (5,377)                 (22,433)
                                                                               
 Cash and cash equivalents at                                                                    
 the end of the year                                     1,411,079               538,018
                                                                               

Amphion Innovations plc
Notes to the consolidated financial statements
 
For the year ended 31 December 2009

1.  General information

Amphion Innovations plc (the "Company") is a public limited company incorporated in the Isle of Man under the Companies Acts 1931 to 2004 on 7 June 2005 with registered number 113646C.   The address of the registered office is 15-19 Athol Street, Douglas, Isle of Man, IM1 1LB.  The principal place of business is 330 Madison Avenue, New York, NY, 10017, USA.  The principal activity of the Company and its subsidiaries (the "Group") is to build shareholder value in high growth companies in the medical and technology sectors, by using a focused, hands-on company building approach, based on decades of experience in both the US and UK.        

The consolidated financial statements include the accounts of Amphion Innovations plc and its four wholly owned subsidiaries, Amphion Innovations US Inc. and DataTern, Inc., which are incorporated in the United States, Amphion Innovations UK Ltd., which is incorporated in the United Kingdom, and MSA Holding Company which is incorporated in the Kingdom of Bahrain.  As a result of the surrender of the 50% ownership interest held by the former shareholder in exchange for the transfer of certain assets from MSA Holding Company, with effect from 1 July 2009, the Company's ownership in MSA Holding Company increased from 50% to 100%.  No goodwill arose on this transaction. 

These financial statements are presented in US dollars because that is the currency of the primary economic environment in which the Company operates.

Going concern

The Group's business activities, together with factors likely to affect its future development, performance, and financial position and commentary on the Group's financial results, its cash flows and liquidity requirements are set out in the Chairman and CEO's Statement.  In addition, note 16 to the financial statements includes the Group's objectives, policies, and processes for managing its capital, its financial risk management objectives, details of its financial instruments, and its exposures to liquidity risk and credit risk.

The Group has been able to meet its obligations through fund raising, providing advisory services to its Partner Companies, and from the revenue from the licensing of intellectual property.  The current economic conditions create uncertainty over the Group's ability to raise new funds for itself (through the Convertible Promissory Notes programme) and its Partner Companies, the continued success of the licensing activity and advisory fees provided from its Partner Companies and the Group's ability to achieve timely exits for its investments via IPOs or trade sales.

These matters indicate the existence of material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Board has considered various alternative operating and funding strategies should these be necessary and has a reasonable expectation that the Group has viable options to allow it to continue as a going concern.  These options include the reduction in its fundings to Partner Companies, the reduction in its working capital requirements, and an acceleration of its licensing activities.

After making due enquiries, the Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

2.  Significant accounting policies

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).  

Adoption of new and revised Standards

The Group has adopted the following new and amended IFRSs as of 1 January 2009:

IFRS 8 Operating Segments 

IFRS 8 is a disclosure Standard that has had no impact on the Group's reportable segments or on the reported results or financial position of the Group.

2.  Significant accounting policies, (continued)

Adoption of new and revised Standards, (continued) 

IAS 1 (revised 2007) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009)

The revised Standard has introduced a number of terminology changes (including revised titles for the condensed financial statements) and has resulted in a number of changes in presentation and disclosure.  However, the revised Standard has had no impact on the reported results or financial position of the Group.
                    

As of the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

First-time adoption of IFRSs (IFRS 1): amendments to IFRS 1.  Amendments issued in July 2009 and January 2010.  These amendments are effective for annual periods beginning on or after 1 January 2010 and July 2010, respectively, with earlier application permitted.

Amendment to IFRIC 14:  Prepayments of a Minimum Funding Requirement was issued in November 2009.  The amendment is effective for annual periods, beginning on or after 1 January 2011, with earlier application permitted.

IFRIC 19 Extinguishing Financial Liabilities with Equity was issued in November 2009.  The interpretation is effective for annual periods, beginning on or after 1 July 2010, with earlier application permitted.

IFRS 9 Financial Instrumentswas issued in November 2009.  The standard is effective for annual periods, beginning on or after 1 January 2013, with earlier application permitted.

Related Party Disclosures.  Revised IAS 24 Related Party Disclosures was issued in November 2009.  The revised standard is effective for annual periods beginning on or after 1 January 2011, with earlier application permitted.

In October 2009 the Board discussed responses to the exposure draft Discount Rate for Employee Benefits (Amendments to IAS 19), published in August 2009.  The responses indicated that the proposed amendment raised more complex issues than had been expected.  The Board therefore decided to adhere to its original plan to address measurements issues only in the context of a fundamental review.  Thus, the Board decided not to proceed with the amendment.

Classification of rights issues.  Classification of Rights Issues (Amendment to IAS 32) issued in October 2009.  Entities are required to apply the amendment for annual periods beginning on or after 1 February 2010, but earlier application is permitted.

IFRS for SMEs.  IFRS issued in July 2009.

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.

The financial statements have been prepared on the historical cost basis, modified by the revaluation of investments.  The principal accounting policies adopted are set out below.

Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments: Disclosures)

The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk.  The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with transitional reliefs offered in these amendments.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries).  Control is achieved where the Company has the power to govern the financial and operating policies of any entity so as to obtain benefits from its activities.

The results of subsidiaries acquired during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal.  

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income, and expenses are eliminated on consolidation.
                                              

2.  Significant accounting policies, (continued)

Cash and cash equivalents

Cash and cash equivalents include balances with banks and demand deposits, which have maturities of less than three months

Investments

Investments comprise equity investments, warrants, options, and promissory notes.  Investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.

Investments are designated as fair value through profit and loss upon their initial recognition.  Investments are carried at a value determined by management using the International Private Equity and Venture Capital Valuation Guidelines.  The following broad guidelines are generally used in security valuations:  a) marketable securities which are freely tradable and for which quotations are readily available are valued using their bid price, (b) all other securities are valued at fair value as estimated by management in good faith.  Factors generally considered in determining fair value are the latest offering price from the most recently executed financing transactions related to the Partner Companies and comparison to similar instruments of similar companies.  

Investments in subsidiaries

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Prepaid expenses and other receivables

Prepaid expenses and other receivables are stated at their amortised cost which approximates their fair value.  Other receivables are reduced by appropriate allowances for estimated irrecoverable amounts and do not carry any interest.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.  

Convertible promissory notes

Compound financial instruments are required by IAS 32 Financial Instruments: Presentation to be separated into their liability and equity components upon initial recognition.   To meet the definition of equity, the contract must be settled by a fixed amount of cash in exchange for a fixed amount of equity instruments.  However, since the Company issued the convertible promissory notes ("CPNs") in a currency other than its functional currency, a fixed number of shares will be delivered in exchange for a variable amount of cash, therefore the definition of equity is not met.  Consequently, the CPNs are classified wholly as liabilities at fair value through the profit and loss account.  The warrants that were issued with the CPNs have been accounted for as part of the same financial instrument as the CPNs in accordance with IAS 39:  Financial instruments - Recognition and Measurement, since they were entered into at the same time and in contemplation of each other, they have the same counterparty, they relate to the same risk and are non-transferable. 

Trade and other payables

Trade and other payables are not interest bearing and are stated at amortised cost which approximates their fair value.

Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

2.  Significant accounting policies, (continued)
 Financial instruments, (continued)

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payments.

The Group issues equity-settled share-based payments to certain employees and consultants.  Equity-settled share-based payments are measured at fair value at the date of grant.  The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.  The fair value of equity-settled share-based payments attributable to the issue of equity instruments is charged against equity.

Fair value is measured using the Black-Scholes pricing model.  The expected life used in the model has been adjusted based on management's best estimate for effects of non-transferability, exercise restrictions, and behavioral considerations.

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance.  The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves, and retained earnings.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date.  Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for and services provided in the normal course of business, net of VAT and other sales related taxes.

Revenue from license agreements is recognised in accordance with the substance of the agreement and when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.

Where assignment of rights for a fixed fee under a non-cancellable contract permits the licensee to exploit those rights freely and the licensor has no remaining obligations to perform, the revenue is recognised at the time of sale.

Where a license fee is contingent on the occurrence of a future event, the revenue is only recognized when it is probable that the fee will be received.

Expenses

Cost of sales

Revenue related costs only include the direct fees paid for strategic advisory services for licensing and enforcing various patents.

Interest income

Interest income is recognised on an accruals basis.

Dividend income

Dividend income from investments is recognised when the shareholders' right to receive payment has been established.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.  All other leases are classified as operating leases.

2.  Significant accounting policies, (continued)

Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency).  For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in US dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

Transactions in currencies other than US dollars are recorded at the rates of exchange prevailing on the dates of the transactions.  At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.  Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.  

Gains and losses arising on retranslation are included in net profit or loss for the year, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.

On consolidation, the assets and liabilities of the Group's overseas operations are translated at exchange rates prevailing on the balance sheet date.  Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly.  Exchange differences arising, if any, are recognized in the statement of comprehensive income and are transferred to the Group's translation reserve.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. 

Deferred tax is calculated at the tax rates that are expected to apply to the period when the liability is settled or the asset realised.  

Property, plant and equipment

Property, plant, and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives of 3-5 years, using the straight-line method.

Intangible assets

Intangible assets comprise patents and other intellectual property with finite useful lives and are measured initially at purchase cost and are amortised on a straight-line basis over their estimated useful lives of 5-10 years.

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.  If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).  Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.  An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

3.  Key sources of estimation uncertainty

The preparation of the Group's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingencies at the date of the Group's financial statements, and revenue and expenses during the reporting period.  Actual results could differ from those estimated.  Significant estimates in the Group's financial statements include the amounts recorded for the fair value of the investments and other receivables.  By their nature, these estimates and assumptions are subject to an inherent measurement uncertainty and the effect on the Group's financial statements of changes in estimates in future periods could be significant.

Fair value of financial instruments

As described in note 2, the Directors use their judgment in selecting an appropriate valuation technique for financial instruments not quoted in an active market.  Valuation techniques commonly used by market practitioners are applied.  The estimation of fair value of unlisted shares includes some assumptions not supported by observable market prices or rates.  The carrying amount of the unlisted shares is US $40.3 million (2008:  US $41.9 million).  Details of the assumptions used and of the results of sensitivity analyses regarding these assumptions are provided in notes 15 and 16.

Fair value of other receivables

As described in note 2, other receivables are stated at their amortised cost which approximates their fair value and are reduced by appropriate allowances for estimated irrecoverable amounts and do not carry any interest.  Note 16 describes how the Group mitigates the counterparty credit risk associated with advisory fees due from Partner Companies including those that are past due at 31 December 2009.  The recovery of the advisory fees due at 31 December 2009 of US $1,319,251 is dependent on the future liquidity of the Partner Companies which is currently unknown.

The valuation of the investments and other receivables at 31 December 2009 assumes that the Partner Companies continue to receive ongoing funding in accordance with their 2010 forecast.  If this funding is not received, this would have an adverse impact on the valuation of the investments and the ability of the Partner Companies to settle their debts, which would in turn impact the valuation of other receivables.

4.  Revenue

An analysis of the Group's and Company's revenue for the period is as follows:

                                     Group                 Company                   Group                 Company
                                Year ended              Year ended              Year ended              Year ended
                          31 December 2009        31 December 2009        31 December 2008        31 December 2008
                                      US $                    US $                    US $                    US $
 Continuing operations                                                                      
 Advisory fees                   1,044,171                       -               1,637,694                     -  
 License fees                    7,614,100                                                                        
                                                                 -               5,450,250                       -
                                                                                               
                                                                                            
 Fee income                      8,658,271                                                                     -  
                                                         -                       7,087,944  

DataTern, Inc., a wholly owned subsidiary of the Company, has entered into an agreement with IP Navigation Group, LLC which provides strategic advisory services including licensing and enforcement of various patents held by DataTern, Inc.  Under this agreement, LSC Holdings LLC ("LSC") could advance up to US $2,000,000 to DataTern, Inc. under a promissory note to pay the expenses related to the licensing and enforcement of the patents.  In July 2009, the Company has also entered into an agreement with LSC entitling it to subscribe to a maximum of 1,000,000 warrants in the Company of one ordinary share subject to certain milestones being met.  Under the terms of the agreement, the Company will issue the warrants in tranches of 100,000 upon LSC meeting each milestone.  The milestones are linked to the net proceeds received by the Group under the terms of the agreement between IP Nav and DataTern discussed below.  As at 31 December 2009, the Company had issued 300,000 warrants to LSC.  The promissory note has an 8% interest rate with repayment coming exclusively from the proceeds of the licensing and enforcement programme.  The note is due 18 February 2013 and is secured by the assets of DataTern, Inc.  The promissory note had a US $ nil balance outstanding at 31 December 2009 (2008: US $52,563).

During 2009, IP Navigation Group, LLC assisted in obtaining non-exclusive licenses of DataTern's key database patents to various companies totaling US $7,600,000 (2008: US $5,450,250).  As part of the agreement, IP Navigation Group, LLC received advisory fees of fifty percent of the gross proceeds less the repayment of expenses funded by IP Navigation Group, LLC and related interest which amounted to US $658,676, and expenses of third parties which totaled $1,206,819.  The advisory fees paid to IP Navigation Group, LLC totaled US $2,867,253 (2008: US $3,676,250).

As part of the agreement for DataTern, Inc. to purchase certain of the intangible assets in December 2007, a portion of future revenues from these patents will be retained by FireStar Software, Inc.  No amounts have become payable to FireStar Software, Inc. to date.

5.  Business and geographical segments

Business segments

The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009.  IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.  In contrast, the predecessor Standard (IAS 14 Segment Reporting) required an entity to identify two sets of segments.  There has been no change to the identification of the Group's reportable segments as a result of the adoption of IFRS 8.

For management purposes for 2009, the Group is organised into three business segments - advisory services, investing activities, and intellectual property.  These business segments are the basis on which the Group reports its primary segment information.

Segment information about these businesses is presented below.

                                                 Advisory               Investing            Intellectual                          
                                                 services              activities                property            Eliminations            Consolidated
                                               Year ended              Year ended              Year ended              Year ended              Year ended
                                              31 December             31 December             31 December             31 December             31 December
                                                     2009                    2009                    2009                    2009                    2009
                                                     US $                    US $                    US $                    US $                    US $
 REVENUE                                                                                                                           
 External advisory fees                     1,044,171                                                                                        1,044,171
                                                             -                       -                       -                     
 External license fees                                                                      7,614,100                                        7,614,100
                                     -                       -                                               -                     
 Inter-segment fees                              240,000               117,097                                          (357,097)                       
                                                                                     -                                               -  
   Total revenue                            1,284,171                  117,097                 7,614,100                (357,097)            8,658,271
 Cost of sales                                                                                (2,867,253)                                     (2,867,253)
                                     -                       -                                               -                     
 Gross profit/(loss)                        1,284,171                  117,097              4,746,847                   (357,097)            5,791,018
 Administrative expenses                      (1,723,186)             (2,482,275)             (2,835,591)              357,097             (6,683,955)
                                                                                                                                   
 Segment result                                 (439,015)             (2,365,178)           1,911,256                                         (892,937)
                                                                                                             -                     
                                                                                                                                   
 Fair value losses on investments                                     (1,792,349)                                                          (1,792,349)
                                     -                                               -                       -                     
 Interest income                                                       413,751                     5,797                 (3,769)                415,780
                                                        1                                                                          
 Other gains and losses                                                   (5,377)                                                                        
                                     -                                               -                       -                                    (5,377)
 Finance costs                                                          (322,174)                (14,317)                  3,769                (332,722)
                                     -                                                                                             
 (Loss)/profit before tax                       (439,014)             (4,071,327)           1,902,736                                         (2,607,605)
                                                                                                             -                     
 Income taxes                                                             (9,610)               (340,395)                                       (350,005)
                                     -                                                                       -                     
                                                                                                                                   
 (Loss)/profit after tax                        (439,014)             (4,080,937)           1,562,341                                         (2,957,610)
                                                                                                             -                     
                                                                                                                                   
 OTHER INFORMATION                                                                                                                 
 Segment assets                             1,875,497                  66,080,798           3,442,772              (4,136,544)             67,262,523
                                                                                                                                   
 Segment liabilities                        1,960,044                   9,631,247           2,535,299              (2,217,376)             11,909,214
                                                                                                                                   
 Capital additions                                 3,081                      807                  1,886                                           5,774
                                                                                                             -                     
 Depreciation                                      5,814                   3,768                      714                                        10,296
                                                                                                             -                     
 Amortisation                                                                                    87,520                                          87,520
                                     -                       -                                                                     
 Recognition of share-based                                                                                                        

payments                                                        1,140,874                                                                1,140,874
                                     -                                               -                       -                     

5.  Business and geographical segments, (continued)

For management purposes for 2008, the Group was also organised into three business segments - advisory services, investing activities, and intellectual property.  

                                                Advisory               Investing            Intellectual                          
                                                services              activities                property            Eliminations            Consolidated
                                              Year ended              Year ended              Year ended              Year ended              Year ended
                                             31 December             31 December             31 December             31 December             31 December
                                                    2008                    2008                    2008                    2008                    2008
                                                    US $                    US $                    US $                    US $                    US $
 REVENUE                                                                                                                          
 External advisory fees                    1,637,694                                                                                        1,637,694
                                                            -                       -                       -                     
 External license fees                                                                     5,450,250                                        5,450,250
                                    -                       -                                               -                     
 Inter-segment fees                           240,000                 173,027                                        (413,027)                         
                                                                                    -                                               -  
   Total revenue                           1,877,694                  173,027              5,450,250                 (413,027)              7,087,944
 Cost of sales                                                                            (3,676,250)                                      (3,676,250)
                                    -                       -                                               -                     
 Gross profit                              1,877,694                  173,027              1,774,000                 (413,027)              3,411,694
 Other operating income                                                                           7,000                        -                   7,000
                                    -                       -                                                                     
 Administrative expenses                  (2,114,834)             (2,614,901)             (2,483,084)                 413,027             (6,799,792)
                                                                                                                                  
 Segment result                              (237,140)            (2,441,874)                (702,084)                                    (3,381,098)
                                                                                                            -                     
                                                                                                                                  
 Fair value gains on investments                                   1,967,216                                                                1,967,216
                                    -                                               -                       -                     
 Interest income                                     124              315,302                     2,084               (42,722)                 274,788
 Other gains and losses                                                (22,433)                                                                (22,433)
                                    -                                               -                       -                     
 Finance costs                                                         (26,229)                (46,371)                 42,722                 (29,878)
                                    -                                                                                             
 Profit before tax                           (237,016)               (208,018)               (746,371)                                    (1,191,405)
                                                                                                            -                     
 Income taxes                                    (3,696)                 (9,434)                                                               (13,130)
                                                                                    -                       -                     
                                                                                                                                  
 Loss after tax                              (240,712)               (217,452)               (746,371)                                     (1,204,535)
                                                                                                            -                     
                                                                                                                                  
 OTHER INFORMATION                                                                                                                
 Segment assets                            1,437,863                  61,587,443           2,209,950              (1,716,174)             63,519,082
                                                                                                                                  
 Segment liabilities                          813,531                 697,803              2,864,817              (1,282,633)               3,093,518
                                                                                                                                  
 Capital additions                                                        2,487               131,400                                          133,887
                                    -                                                                       -                     
 Depreciation                                     5,856                   5,811                      169                                         11,836
                                                                                                            -                     
 Amortisation                                                                                 253,935                                          253,935
                                    -                       -                                                                     
 Recognition of share-based                                                                                                       

payments                                                       1,103,235                                                                1,103,235
                                    -                                               -                       -                     

5.  Business and geographical segments, (continued)

Geographical segments

The Group's operations are located in the United States and the United Kingdom.

The following table provides an analysis of the Group's external advisory fees by geographical location of the investment.

                     External advisory fees by
                       geographical location
                               
                         2009               2008
                         US $               US $
                               
 United States        780,000          1,104,450
 United Kingdom       264,171            533,244
                    1,044,171          1,637,694

The following table provides an analysis of the Group's external license fees by geographical location.

                             External license fees by
                               geographical location
                                                  
                                            2009             2008
                                            US $             US $
                                                  
 United States                         7,600,000        5,425,000
 Europe                                   14,100           25,250
                      7,614,100                         5,450,250

The following is an analysis of the carrying amount of segment assets and capital additions analysed by the geographical area in which the assets are located:

                      Carrying amount          Additions to fixtures, fittings and
                     of segment assets          equipment, and intangible assets
                                             
                        2009           2008           2009                    2008
                        US $            US$           US $                     US$
                                             
 United States    49,993,595     44,893,146          4,967                 131,400
 United Kingdom   17,268,928     18,625,936            807                   2,487
                  67,262,523     63,519,082          5,774                 133,887

6.  Loss before tax

Loss before tax has been arrived at after crediting/(charging) the following gains and losses:

                                            Group             Company                   Group                 Company
                                       Year ended          Year ended              Year ended              Year ended
                                 31 December 2009    31 December 2009        31 December 2008        31 December 2008
                                             US $                US $                    US $                    US $
                                                                                               
 Net foreign exchange                     (5,377)             (5,377)                (22,433)                (22,433)
 gains/(losses)                                                                                
                                                                                               
 Change in fair value of              (1,792,349)         (1,554,053)               1,967,216               1,665,716
 financial assets designated as                                                                
 at fair value through profit                                                                  
 or loss                                                                                       
                                                                                               
 Depreciation of equipment                 10,296               2,397                  11,836                        
                                                                                                                4,488
                                                                                               
 Amortisation of intangible                87,520                   -                 253,935                       -
 assets                                                                                        
                                                                                               
 Auditors' remuneration - audit           120,739              43,893                                                
 services                                                                             177,903                 117,765
                                                                                               
 Auditors' remuneration -                  48,000              48,000                  26,813                  26,813
 taxation services                                                                             
                                                                                               

7.  Staff costs

The average monthly number of employees (including Executive Directors) was:

                                                                  2009      2008
                                                                Number    Number
                                                                        
 Amphion Innovations plc, Amphion Innovations                           
 US Inc., and DataTern, Inc.  (some employees                        7         7
 and costs are shared)                                                  
 Amphion Innovations UK Ltd.                                         1         2
                                                                        
 Total for the Group                                                 8         9

                                            Group    Company               Group                 Company
                                             2009       2009                2008                    2008
 Their aggregate remuneration                US $       US $                US $                    US $
 comprised:                                                                       
                                                                                  
 Wages and salaries                     1,648,124    772,579           2,457,373               1,084,024
 Social security costs                     65,034     13,087              90,364                  10,553
 Other pension costs  (see note           22,549           -              26,715                      - 
 23)                                                                              
                                                                                  
                                        1,735,707    785,666           2,574,452               1,094,577

8.  Interest income

                          Group        Company          Group        Company
                     Year ended     Year ended     Year ended     Year ended
                    31 December    31 December    31 December    31 December
                           2009           2009           2008           2008
                           US $           US $           US $           US $
                                                               
 Interest income:                                              

Bank deposits        2,127             98         31,436         28,370

Investments        413,653        413,653        243,352        286,075

Other                    -              -              -              -
                                                               
                        415,780        413,751        274,788        314,445

9.  Finance costs

                                     Group        Company          Group        Company
                                Year ended     Year ended     Year ended     Year ended
                               31 December    31 December    31 December    31 December
                                      2009           2009           2008           2008
                                      US $           US $           US $           US $
                                                                          
 Interest on promissory notes      332,722        322,173         29,878         26,229
                                                                          
                                   332,722        322,173         29,878         26,229

10.  Income tax expense

                                    Group                                  Group
                               Year ended                             Year ended
                         31 December 2009                       31 December 2008
                                     US $                                   US $
                                           
 Isle of Man income tax                 -                                       
                                             -  
 Tax on US subsidiaries           340,395                                  3,696
 Tax on UK subsidiary               9,610                                  9,434
                                           
 Current tax                      350,005                                 13,130
                                                                                                      

From 6 April 2006, a standard rate of corporate tax of 0% applies to Isle of Man companies, with exceptions taxable at the 10% rate, namely licensed banks in respect of deposit-taking business, companies that profit from land and property in the Isle of Man, and companies that elect to pay tax at the 10% rate.  No provision for Isle of Man taxation is therefore required.  The Company is treated as a Partnership for U.S. federal and state income tax purposes and, accordingly, its income or loss is taxable directly to its partners.  

The Company has four subsidiaries, two in the USA, one in the UK, and one in the Kingdom of Bahrain.  The US subsidiaries, Amphion Innovations US Inc. and DataTern, Inc., are Corporations and therefore taxed directly.  The US subsidiaries suffer US federal tax, state tax, and New York City tax on their taxable net income.  The UK subsidiary, Amphion Innovations UK Ltd., is liable to UK Corporation tax at rates of up to 30% on its taxable profits and gains.

The Group charge for the year can be reconciled to the profit per the consolidated income statement as follows:

                                                2009                        2008
                                                US $                        US $
                                                      
 Loss before tax                         (2,607,605)                 (1,191,405)
                                                      
 Tax at the Isle of Man income tax                 -                         -  
 rate of 0%                                           
                                                      
 Effect of different tax rates of                     
 subsidiaries                                         
 operating in other jurisdictions            350,005                      13,130
                                                      
 Current tax                                 350,005                      13,130

11.  Earnings per share

The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data:

 Earnings                                             
                                          Year ended              Year ended
                                    31 December 2009        31 December 2008
                                                US $                    US $
 Loss for the purposes of basic                       
 and diluted earnings per share                       
                                                      

(loss for the year                  (2,957,610)                        
 attributable to equity holders of                               (1,204,535)
 the parent)                                          

 Number of shares                                  
                                       Year ended              Year ended
                                 31 December 2009        31 December 2008
                                                                         
                                                                         
                                                                         
 Weighted average number of                        
 ordinary shares for                               
                                                   
                                                   

the purposes of basic            131,459,042                        
 earnings per share                                           130,183,495
                                                   
 Effect of dilutive potential                      
 ordinary shares:                                  

Share options                        421,968                       -

Convertible promissory            26,990,361                        
 notes                                                         12,171,667
                                                   
 Weighted average number of                        
 ordinary shares for                               

the purposes of diluted          158,871,371                        
 earnings per share                                           142,355,162

Shareoptions that could potentially dilute basic earnings per share in the future have not been included in the calculation of dilute earnings per share because they are antidilutive.

12.  Intangible assets

                                                              Patents, software,
                                                        trademark, and copyright
 COST                                                                       US $

 At 1 January 2008                                  2,274,636                
 Additions                                             129,714

 At 31 January 2009                                 2,404,350
 Adjustment                                           (793,861) 

 At 31 December 2009                                1,610,489

 AMORTISATION

 At 1 January 2008                                                 -  
 Charge for the period                                 253,935  

 At 1 January 2009                                     253,935  
 Charge for the period                                   87,520                 

 At 31 December 2009                                   341,455

 CARRYING AMOUNT

 At 31 December 2009                                1,269,034

 At 31 December 2008                                 2,150,415

The intangible assets include certain intellectual property assets which were acquired on 20 December 2007 in a transaction between Amphion Innovations plc, DataTern, Inc. ("DataTern"), a wholly owned subsidiary of Amphion Innovations plc, and FireStar Software, Inc. ("FireStar"), a company in which Amphion Innovations plc holds an investment.  The assets were purchased for the following consideration:  discharge of debtor of US $415,000 and assumption by Amphion of certain third party payables totaling approximately US $1.8 million.  In 2009, settlements were made with certain third parties which resulted in a decrease of $793,861 in payables assumed by Amphion and as a result intangible assets acquired from FireStar Software, Inc. were adjusted for the amount of the decrease.  Under the terms of the purchase, FireStar retains an interest of 48.29% of any future distributions on the 502 Patent and 24.14% of any future distributions on the 402 and 077 Patents.  No amounts were due to FireStar at the year end (2008: nil).

13.  Property, plant, and equipment
                                          Group                           Company
                               Property, plant,                  Property, plant,
                                  and equipment                     and equipment
 COST                                      US $                              US $
                                                 
 At 1 January 2008                       51,718                            19,986
 Additions                                4,173                                 -
                                                 
 At 1 January 2009                       55,891                            19,986
 Additions                                5,774                                 -
                                                 
 At 31 December 2009                     61,665                            19,986
                                                 
 ACCUMULATED DEPRECIATION                        
                                                 
 At 1 January 2008                       23,557                            13,100
 Charge for the period                   11,836                             4,489
 Exchange difference                        772                                 -
                                                 
 At 1 January 2009                       36,165                            17,589
 Charge for the period                   10,296                             2,397
 Exchange difference                      (420)                                 -
                                                 
 At 31 December 2009                     46,041                            19,986
                                                 
 CARRYING AMOUNT                                 
                                                 
 At 31 December 2009                     15,624                                 -
                                                 
 At 31 December 2008                                                        2,397
                                         19,726  

14.  Investments in subsidiaries

Details of the Company's subsidiaries at 31 December 2009 and 2008 are as follows:

                                          Place of                                                                                    
                                     incorporation      Proportion of         Proportion of                                           
 Name of                        (or registration)     ownership interest    voting power held       Share                             
 subsidiary                          and operation     2009       2008       2009       2008        Class    Principal activity       
                                                           %           %         %          %                                         
 Consolidated                                                                                                                         
 Amphion Innovations US Inc.         Delaware, USA       100         100       100        100      Common    Advisory services        
 Amphion Innovations UK Ltd.       England & Wales       100         100       100        100    Ordinary    Advisory services        
 DataTern, Inc.                         Texas, USA       100         100       100        100      Common    Intellectual property    
 MSA Holding Company BSC        Kingdom of Bahrain       100          50       100         50    Ordinary              Investments    

14.  Investments in subsidiaries, (continued)

The investments in subsidiaries are all stated at cost. 

With effect from 1 July 2009, the Company's ownership in MSA Holding Company BSC ("MSA") increased from 50% to 100% and at this date MSA became a subsidiary of the Company.  No goodwill arose on this acquisition.

15.  Investments   

At fair value through profit and loss

                                                  Group                                       Company                         
                                            31 December 2009                             31 December 2009                     
                                                              Unrealised                                            Unrealised
                                 Fair Value          Cost    gain/(loss)    Fair Value              Cost           gain/(loss)
                                       US $          US $           US $          US $              US $                  US $
 Level 1:  Public companies:                                                            
 Axcess International, Inc.       2,589,613     4,026,947    (1,437,334)     2,589,613         4,026,947           (1,437,334)
                                                                                        
 Level 3:  Private companies:                                                           
 FireStar Software, Inc.          4,517,283     4,751,783      (234,500)     4,517,283         4,751,783             (234,500)
 Kromek                          14,302,945     3,274,915     11,028,030    14,302,945         3,274,915            11,028,030
 Motif BioSciences, Inc.         17,779,810    10,472,418      7,307,392    16,279,810         8,972,418             7,307,392
 m2m Imaging Corp.                6,939,550     2,593,685      4,345,865     6,545,070         2,593,685             3,951,385
 Myconostica Ltd.                 2,905,464     3,051,366      (145,902)     2,905,464         3,051,366             (145,902)
 PrivateMarkets, Inc.             5,230,102     3,985,102      1,245,000     5,230,102         3,985,102             1,245,000
 WellGen, Inc.                    6,674,228     4,957,936      1,716,292     6,674,228         4,957,936             1,716,292
                                                                                        
                                 60,938,995    37,114,152     23,824,843    59,044,515        35,614,152            23,430,363
                                                                                        
                                                  Group                                       Company                         
                                            31 December 2009                             31 December 2009                     
                                                              Unrealised                                     Unrealised       
                                 Fair Value          Cost    gain/(loss)      Fair Value          Cost      gain/(loss)       
                                       US $          US $           US $            US $          US $             US $       
                                                                                                                              
 Shares                          42,852,579    23,275,216     19,577,363      41,352,579    21,775,216       19,577,363       
 Promissory notes                10,175,978    10,175,978         -           10,175,978    10,175,978           -            
 Warrants & options               7,910,438     3,662,958      4,247,480       7,515,958     3,662,958        3,853,000       
                                                                                                                              
                                 60,938,995    37,114,152     23,824,843      59,044,515    35,614,152       23,430,363       

15.  Investments, (continued)

                                                  Group                                       Company                         
                                            31 December 2008                             31 December 2008                     
                                                              Unrealised                                            Unrealised
                                 Fair Value          Cost    gain/(loss)    Fair Value              Cost           gain/(loss)
                                       US $          US $           US $          US $              US $                  US $
 Level 1:  Public companies:                                                            
 Axcess International, Inc.       1,612,931     3,447,794    (1,834,863)     1,612,931         3,447,794           (1,834,863)
                                                                                        
 Level 3:  Private companies:                                                           
 FireStar Software, Inc.          4,721,447     4,941,783      (220,336)     4,721,447         4,941,783             (220,336)
 Kromek                          14,370,477     3,274,915     11,095,562    14,370,477         3,274,915            11,095,562
 Motif BioSciences, Inc.         15,402,879     8,085,625      7,317,254    15,402,879         8,085,625             7,317,254
 MSA Holding B.S.C.               1,474,905     1,500,000       (25,095)     1,474,905         1,500,000              (25,095)
 m2m Imaging Corp.                6,642,861     2,172,453      4,470,408     6,010,085         2,118,685             3,891,400
 Myconostica Ltd.                 4,216,206     2,745,331      1,470,875     4,216,206         2,745,331             1,470,875
 PrivateMarkets, Inc.             3,918,673     2,673,673      1,245,000     3,918,673         2,673,673             1,245,000
 WellGen, Inc.                    6,669,553     4,814,936      1,854,617     6,669,553         4,814,936             1,854,617
                                                                                        
                                 59,029,932    33,656,510     25,373,422    58,397,156        33,602,742            24,794,414
                                                                                        
                                                  Group                                       Company                         
                                            31 December 2008                             31 December 2008                     
                                                              Unrealised                                     Unrealised       
                                 Fair Value          Cost    gain/(loss)      Fair Value          Cost      gain/(loss)       
                                       US $          US $           US $            US $          US $             US $       
                                                                                                                              
 Shares                          43,540,862    22,969,181     20,571,681      43,540,862    22,969,181       20,571,681       
 Promissory notes                 6,780,602     6,780,602         -            6,780,602     6,780,602           -            
 Warrants & options               8,708,468     3,906,727      4,801,741       8,075,692     3,852,959        4,222,733       
                                                                                                                              
                                 59,029,932    33,656,510     25,373,422      58,397,156    33,602,742       24,794,414       

Group:

 Level 3 Private Companies:
                                                                 Promissory              Warrants
                                               Shares                 notes           and options              Total
 Fair value at 1 January 2009            42,966,886             5,742,329               8,707,786         57,417,001
 Additions                                    306,036           2,816,223                                  3,122,259
                                                                             -  
 Disposals                                                                           (243,768)             (243,768)
                                    -                     -
 Fair value movements                    (1,338,705)                                 (607,405)          (1,946,110)
                                                          -  

 Fair value at 31 December 2009         41,934,217              8,558,552               7,856,613         58,349,382

15.  Investments, (continued)

Company:

 Level 3 Private Companies:
                                                                   Promissory                  Warrants
                                               Shares                   notes               and options              Total
 Fair value at 1 January 2009            42,966,886             5,742,329                     8,075,010         56,784,225
 Less:  MSA consolidated in               (1,474,905)                                               -         (1,474,905)
 2009                                                  -
 Additions                                    306,036           2,816,223                           -            3,122,259
 Disposals                                                                             (190,000)                 (190,000)
                                    -                  -
 Fair value movements                    (1,363,800)                                   (422,877)              (1,786,677)
                                                       -  

 Fair value at 31 December 2009         40,434,217              8,558,552                     7,462,133         56,454,902

As required by IFRS 7:  Financial instruments - Disclosures, the Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements.  In the case of the Company, the investment in Axcess has been classified as level 1 as the valuation is based on a quoted price in an active market.  The other private investments have been classified as level 3 since the inputs to the valuation are not based on observable market data.

Fair value determination

At 31 December 2009 the one publicly traded company, Axcess International, Inc. ("Axcess"), is valued based on its quoted bid price.  In regard to the Group's valuation of Axcess, the Directors have assumed an orderly sale of the stock over an extended period of time and have therefore chosen not to apply a discount to the quoted market price.    Equity investments in Kromek, FireStar Software, Inc., Motif BioSciences, Inc., m2m Imaging Corp., Myconostica Ltd., PrivateMarkets, Inc. (formerly Energy Trading International, Inc.) and WellGen, Inc. are valued using the latest offering price from the most recently executed financing transaction by those companies.  The prices used are as follows:  for Kromek £7.20 from January 2010; for FireStar Software, Inc. US $7.00 from August 2006; for Motif BioSciences, Inc. US$3.00 from April 2007; m2m Imaging Corp. US $7.00 from May 2008; for Myconostica Ltd. £1.00 from August 2009; for PrivateMarkets, Inc. US$1.00 from March 2008; and for WellGen, Inc. US$2.50 from October 2007.  Convertible promissory notes held in these companies are carried at fair value.   Warrants for all companies are valued at the valuation price less the warrant exercise price plus a factor for the time value of the warrant.  The time value factor is based on the premise that an in-the-money ten year warrant is worth half the exercise price.

The Group's ownership percentages of the investments are as follows:

                                                                       2009             2008
                                                              Fully-diluted    Fully-diluted
                                                Country of      ownership %      ownership %
                                             incorporation                   
                                                                             
 Axcess International, Inc.        United States of                    9.99             7.83
                                   America                                   
 FireStar Software, Inc.           United States of                   14.15            15.32
                                   America                                   
 Kromek (formerly Durham                   England & Wales            18.88            20.78
 Scientific Crystals Ltd)                                                    
 Motif BioSciences, Inc.           United States of                   43.14            39.11
                                   America                                   
 m2m Imaging Corporation           United States of                   24.96            24.36
                                   America                                   
 Myconostica Ltd.                          England & Wales            19.08            22.89
 PrivateMarkets, Inc. (formerly    United States of                   25.34            27.75
 Energy Trading)                   America                                   
 WellGen, Inc.                     United States of                   14.94            15.05
                                   America                                   

The ownership percentages do not include the potential conversion of convertible promissory notes issued by the Partner Companies.

16.  Other financial assets and liabilities

The carrying amounts of the Group's financial assets and financial liabilities at the balance sheet date are as follows.  The accounting policies described in note 2 explain how the various categories of financial instruments are measured.

                                                              Group                                                              Company
                                               2009                             2008                               2009                             2008
                                        Carrying             Fair        Carrying            Fair           Carrying             Fair        Carrying            Fair
                                          amount            value          amount           value             amount            value          amount           value
                                            US $             US $            US $            US $               US $             US $            US $            US $
 Financial assets                                                                                  
 Fair value through profit or                                                                      
 loss                                                                                              
 Fixed asset investments - designated                                                              
      as such upon initial            60,938,995       60,938,995      59,029,932      59,029,932         59,044,515       59,044,515      58,397,156      58,397,156
 recognition                                                                                       
 Currents assets                                                                                   
 Loans and receivables                                                                             
 Security deposit                         70,735           70,735         121,694         121,694             70,735           70,735         121,694         121,694
 Prepaid expenses and other                                                                        
      Receivables                      1,701,914        1,701,914       1,566,911       1,566,911          1,971,692        1,971,692       1,748,986       1,748,986
 Cash and cash equivalents             3,266,221        3,266,221         630,404         630,404          1,411,079        1,411,079         538,018         538,018
                                                                                                   
 Financial liabilities                                                                             
 Amortised cost                                                                                    
 Trade and other payables              4,390,924        4,390,924       3,093,518       3,093,518          2,078,479        2,078,479         665,719         665,719

The carrying value of cash and cash equivalents, the security deposit, prepaid expenses and other receivables, and trade and other payables, in the Directors' opinion, approximate to their fair value at 31 December 2009 and 2008.   At the balance sheet date other receivables includes subscriptions receivable of US $nil (2008: US $534,036).  
 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.  The Group has adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.  The maximum exposure to credit risk for the financial asset investments designated at fair value through the profit and loss is represented by their carrying value.

The Group's exposure to counterparty credit risk also arises from balances from Partner Companies relating to fees charged for services provided by Amphion.  Amphion seeks to mitigate the risk noted above through its philosophy of working with a small number of rigorously selected Partner Companies, assisting them to grow by implementing a consistent and proven methodology developed over the management team's 20 years of company building experience.  The Group's time tested model of company creation is built on a robust risk management process that relies on proven, defensible intellectual property sourced from some of the world's leading corporations and universities.

Included in the Group's other receivables are debtors which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality of the Partner Companies and the Group believes that the amounts are still considered recoverable.  The Group does not hold any collateral over these balances.  

16.  Other financial assets and liabilities, (continued)

The following table is an analysis of the age of financial assets:

Group

                                                                               More than 3
                                  Not past due         Not more than        months and not             More than
                                   or impaired              3 months      more than 1 year                1 year              Total
                                           US$                                         US$                   US$                US$
                                                US$
 2009
 Fees receivable                                                                                                         1,319,251 
                            -                         219,251         465,000               635,000  
 Rebillable expenses                                                                                                         24,865
                            -                          16,024             1,724             7,117  
 Other receivables                   208,544                                                                                284,397
                                                      27,570                      -         48,283  
 Prepaid expenses                      73,401                                                                                73,401
                                                           -                      -           -  
                                     281,945                                                                              1,701,914
                                                262,845               466,724               690,400  

 2008
 Fees receivable                                                                                                            641,500
                            -                         141,500         315,000               185,000  
 Rebillable expenses                                                                                                         47,684
                            -                          23,141           20,408              4,135  
 Subscription receivable               499,500                     -                     -                     -            499,500
 Other receivables                   273,304                                                                                337,460
                                                      19,620            10,000              34,536  
 Prepaid expenses                      40,767                                                                                40,767
                                                           -                      -           -  
                                     813,571                                                                              1,566,911
                                                184,261               345,408               223,671  

Company     

                                                                             More than 3
                                Not past due         Not more than        months and not             More than
                                 or impaired              3 months      more than 1 year                1 year                 Total
                                         US$                                         US$                   US$                   US$
                                                               US$
 2009
 Fees receivable                                                                                                                880 
                          -                              -                  880             -  
 Rebillable expenses                                                                                                                
                          -                            -                        -           -                   -
 Due from subsidiaries           1,737,788                                                                                 1,737,788
                                                      -                         -           -
 Other receivables                  158,786                                                             38,283           197,069
                                                      -                         -
 Prepaid expenses                     35,955                                                                               35,955
                                                         -                      -           -  
                                 1,932,529                                                                                 1,971,692
                                                      -                      880          38,283  

 2008
 Fees receivable                                                                                                                   
                          -                              -                      -           -                   -  
 Rebillable expenses                                                                                                         9,284
                          -                          9,284                      -           -  
 Due from subsidiaries              883,658                                                                              883,658
                                                      -                         -           -
 Other receivables                  790,563                                                             34,536           825,099
                                                      -                         -
 Prepaid expenses                     30,945                                                                               30,945
                                                         -                      -           -  
                                 1,705,166                                                                                 1,748,986
                                              9,284                             -         34,536  

16.  Other financial assets and liabilities, (continued)

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.  The principal risk to which the Group is exposed is liquidity risk.  

Amphion's investments are in Partner Companies that are often development stage companies and will likely experience significant negative cash flow.  The Partner Companies may be unable to obtain financing to fund their negative cash flows due to market conditions or lack of operational progress.  In these instances, though Amphion is not obligated to do so, the Group may feel it necessary to provide additional investment to the Partner Company and also defer payment of the advisory fees due.  Amphion may also be required to spend additional management time on these companies.

Adverse market conditions may also delay liquidity events for the Partner Companies, thereby requiring additional rounds of financing in which Amphion may feel it necessary to participate.  During these adverse market conditions Amphion may also find it difficult to raise additional capital.

Amphion seeks to mitigate the risk noted above through its philosophy of working with a small number of rigorously selected Partner Companies, assisting them to grow by implementing a consistent and proven methodology developed over the management team's 20 years of company building experience.  The Group's time tested model of company creation is built on a robust risk management process that relies on proven, defensible intellectual property sourced from some of the world's leading corporations and universities.

The following table is a maturity analysis that shows the remaining contractual maturity for the Group's and Company's financial liabilities.

 Group
                                    Less than         1-3         3 months         Over
                                     1 month        months       to 1 year        1 year          Total

 2009
 Trade payables & other                4,390,924            -               -              -      4,390,924
 payables
 Convertible promissory notes                  -            -               -      7,518,290      7,518,290

 2008
 Trade payables & other                  443,738      219,674       1,289,367      1,140,739      3,093,518
 payables
 Convertible promissory notes          3,279,950            -               -              -      3,279,950

 Company
                                    Less than         1-3         3 months           Over
                                     1 month        months        to 1 year         1 year           Total

 2009
 Trade payables & other                2,078,479            -                -                -      2,078,479 
 payables
 Convertible promissory notes                  -            -                -        7,518,290       7,518,290

 2008
 Trade payables & other                  282,196      119,640          236,251           27,632         665,719
 payables
 Convertible promissory notes          3,279,950            -                -                -       3,279,950

The 2009 payables include US $65,063 (2008: US $1,104,409) of payables assumed from FireStar Software, Inc. as part of the Asset Purchase Agreement dated 20 December 2007.

16.  Other financial assets and liabilities, (continued)

Market risk

Market risk is the risk that changes in interest rates, foreign exchange rates, equity prices, and other rates, prices, volatilities, correlations, or other market conditions will have an adverse impact on the Group's financial position or results.  Thus market risk comprises three elements - foreign currency risk, interest rate risk, and other price risk.  Information to enable an evaluation of the nature and extent of these three elements of market risk are shown below.

Amphion seeks to mitigate the risk noted above through its philosophy of working with a small number of rigorously selected Partner Companies, assisting them to grow by implementing a consistent and proven methodology developed over the management team's 20 years of company building experience.  The Group's time tested model of company creation is built on a robust risk management process that relies on proven, defensible intellectual property sourced from some of the world's leading corporations and universities.

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currencies.  Hence, exposures to exchange rate fluctuations arise.  Exchange rate exposures are managed by minimising the balance of foreign currencies to cover expected cash flows during periods where there is strengthening in the value of the foreign currency.  The Group has two UK Partner Companies which are denominated in GBP.  The valuations of these two companies fluctuate along with the US dollar/Sterling exchange rate.  No hedging of this risk is undertaken.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
                                                            Group                                                                   Company
                                       Liabilities                           Assets                              Liabilities                             Assets
                                  2009             2008               2009            2008                 2009                2008               2009            2008
                                   US$              US$               US$              US$                 US$                 US$                 US$            US$
                                                                                                                                            
                                                                                                                                            
 Sterling - Cash equivalent            4,730           32,081         1,369,671          502,407                   -                   -          1,374,657         499,264
 Sterling - Investment                   -                -          17,208,410       18,586,683                   -                   -         17,208,410      18,586,683

A 10% strengthening of the US dollar against the British pound sterling at the reporting date would have increased profit or loss by approximately US $1,857,000 (2008: US $1,906,000).  A 10% weakening of the US dollar against the British pound sterling would have decreased profit or loss of the Group by approximately US $1,857,000 (2008:  US $1,906,000).  A 10% strengthening of the US dollar against the British pound sterling at the reporting date would have increased profit or loss of the Company by approximately US $1,858,000 (2008: US $1,909,000).  A 10% weakening of the US dollar against the British pound sterling would have decreased profit or loss of the Company by approximately US $1,858,000 (2008: US $1,909,000).  The GBP/USD rate used at 31 December 2009 was 1.6167 (2008: 1.4619).  In management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the sensitivity analysis is based on balances at the end of the year and does not reflect the exposure during the year.

Interest rate risk

The Group's exposure to interest rate risk is restricted to the cash and cash equivalent balance of US $3,266,221 (2008:  US $630,404).  At 31 December 2009, the Group's bank accounts were in general not interest bearing due to the low base rate.  The average monthly rate for 2008 was approximately 3%.  An increase of 100 basis points in interest rates would have increased profit or loss of the Group by US $7,000 (2008: US $10,000).  A decrease of 100 basis points in interest rates would have decreased profit or loss of the Group by US $nil (2008:  US $10,000).  An increase of 100 basis points in interest rates would have increased profit or loss of the Company by US $4,000 (2008: US $10,000).  A decrease of 100 basis points in interest rates would have decreased profit or loss of the Company by US $nil (2008: US $10,000).  The Group manages its exposure to interest rate risk by managing its cash balances and deposits to maximise its return while ensuring the Group has sufficient available cash to meet its needs.  The Group does not enter into interest rate derivatives.

16.  Other financial assets and liabilities, (continued)

Other price risks

The Group is exposed to equity price risks arising from equity investments.  Equity investments are held for strategic rather than trading purposes.  The Group does not actively trade these investments.

At the reporting date, the potential effect of using reasonably possible alternative assumptions as inputs to valuation techniques from which the fair values of the investments are determined would be an increase of approximately US $0.7 million (2008: nil) to profit or loss of the Group and the Company using more favourable assumptions and an approximate decrease of US $9 million (2008: US $8.8 million) to profit or loss of the Group and the Company using less favorable assumptions.  The more favorable assumption used in 2009 was an increase in price of 5% in Kromek (2008: 0%).    The less favourable assumptions used were a reduction in price of 10% to 15% (2008: 10% to 15%).  The determination of reasonably possible alternative assumptions is subject to considerable judgement.

The amounts generated from the sensitivity analysis are estimates of the impact of market risk assuming that specified changes occur.  Actual results in the future may differ materially from these results due to developments in the global financial markets which may cause exchange rates to vary from the hypothetical amounts disclosed above, which therefore should not be considered a projection of likely future events and losses.

17.  Trade and other payables 

Group

Trade and other payables principally comprise amounts outstanding for purchases and ongoing costs.  

Company

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.  

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

18.  Convertible promissory notes

During 2009, £2,667,365 (2008: £2,190,900) of convertible promissory notes were issued of which £33,215 (2008: £900,000) were subscribed for by Directors of the Company.  The notes are convertible into ordinary shares of the Company at any time prior to 31 December 2013 at a conversion price of eighteen pence per ordinary share.  In the event that the closing market price of the ordinary shares is equal to or greater than 25 pence per ordinary share for 25 consecutive trading dates at any time prior to 31 December 2013, the notes will automatically be converted into fully paid ordinary shares.

If the notes have not been converted, they will be repaid on 31 December 2013.  Interest of 7% will be paid quarterly until the date of repayment.

For each note issued, the Company also issued 1.11 warrants.  Each warrant will entitle the holder to subscribe for one ordinary share at 20 pence per ordinary share during the subscription period which began on 30 December 2008 and expires on the fifth anniversary of that date.

The net proceeds received from the issue of the convertible promissory notes and warrants are classified as a financial liability due to the fact that the notes are denominated in a currency other than the Company's functional currency and that on any future conversion a fixed number of shares would be delivered in exchange for a variable amount of cash (see note 2).

19.  Share capital
                                                       2009           2008
                                                          £              £
                                                             
 Authorised:                                                 

250,000,000 ordinary shares of 1p each        2,500,000      1,500,000

                                      Number            £         US $
                                                           
 Balance as at 31 December 2007  128,292,029    1,282,920    2,388,071
                                                           
 Issued for cash:                                          

Ordinary shares of 1p each       246,603        2,466        4,884

Ordinary shares of 1p each       521,897        5,219       10,320

Ordinary shares of 1p each     1,136,364       11,364       22,667

Ordinary shares of 1p each        81,780          818        1,528

Ordinary shares of 1p each       100,184        1,002        1,872
                                                           
 Balance as at 31 December 2008  130,378,857    1,303,789    2,429,342
                                                           
 Issued for cash:                                          

Ordinary shares of 1p each       874,977        8,750       12,874

Ordinary shares of 1p each       221,037        2,210        3,142

Ordinary shares of 1p each       207,189        2,072        2,945

Ordinary shares of 1p each       273,976        2,740        4,507

Ordinary shares of 1p each       302,861        3,028        4,847
                                                           
 Balance as at 31 December 2009  132,258,897    1,322,589    2,457,657

Holders of the ordinary shares are entitled to receive dividends and other distributions and to attend and vote at any general meeting.

During the year ended 31 December 2009, the following changes occurred to the share capital of the Company:

On 4 June 2009, the Company increased the share capital by the addition of £1,000,000 divided into 100,000,000 ordinary shares of £0.01 each.

On 30 March 2009, the Company issued 874,977 ordinary 1p shares at a premium of 9.75p per share (US $125,526) to employees as part of their incentive compensation.

On 15 April 2009, the Company issued 221,037 ordinary 1p shares at a premium of 10.14p per share (US $31,858) to Directors in lieu of first quarter Directors' fees.

On 26 May 2009, the Company issued 207,189 ordinary 1p shares at a premium of 9.5p per share (US $27,977) to certain holders of the Convertible Promissory Notes in respect of accrued interest on the Notes.

On 4 June 2009, the Company's share capital was increased by £1,000,000 divided into 100,000,000 ordinary shares of 1p each.

On 24 September 2009, the Company issued 273,976 ordinary 1p shares at a premium of 12.05p per share (US $54,315) to Directors in lieu of Directors' fees.

On 22 October 2009, the Company issued 302,861 ordinary 1p shares at a premium of 13.85p per share (US $67,131) to Directors in lieu of Directors' fees.

20.  Issue costs

The Company did not incur costs relating to the issue of shares in 2009 (2008: US $41,423).  The prior year costs were primarily for fees paid to agents.  These equity transaction costs were deducted from equity in accordance with IAS 32, Financial Instruments Disclosure and Presentation.

21.  Operating lease arrangements

At the balance sheet date, the Group has outstanding commitments under non-cancellable operating leases, which fall due as follows:
                                              2009       2008
                                               US$        US$
                                                    
 Within one year                           294,262    327,500
 In the second to fifth years inclusive    239,295    478,590
 After five years                               -           -
                                                    
                                           533,557    806,090

Operating lease payments represent rentals payable by the Group for certain of its office properties.  The term of the New York lease is seven years of which two years are remaining and the term of the UK lease is eight months ending on August 2010.  The New York rental is fixed for two years.   The UK rental is fixed for 8 months.   The Group recognised expenses of US $375,605 in respect of operating lease arrangements in the year ended 31 December 2009.  

22.  Share-based payments

In 2006 the Group established the 2006 Unapproved Share Option Plan ("the Plan") and it was adopted pursuant to a resolution passed on 8 June 2006.  Under this plan, the Compensation Committee may grant share options to eligible employees, including Directors, to subscribe for ordinary shares of the Company.  The number of Shares over which options may be granted under the Unapproved Plan cannot exceed ten percent of the ordinary share capital of the Company in issue on a fully diluted basis.  The Plan will be administered by the Compensation Committee.  The number of shares, terms, performance targets, and exercise period will be determined by the Compensation Committee.

As of 31 December 2009, a total of 13,528,869 options have been issued (2008: total of 10,170,536) of which 10,400,000 options were issued under the 2006 Unapproved Share Option Plan (2008: 8,500,000) and 1,025,000 options have been forfeited.  

Of the options issued under the Plan in 2009, 1,925,000 options have a one year vesting period and 600,000 options have a three year vesting period.  At 31 December 2009, a total of 5,875,618 options under the Plan were vested (2008: 2,690,112).

As of 31 December 2009, a balance of 2,628,869 options not in the Plan have been issued (2008: 2,295,536) and at 31 December 2009, 2,137,222 of these options were vested (2008: 1,612,207).  These options have expiration dates that range from five to nine years from the date of grant.  Of these options, 333,333 options were issued fully vested in 2009 (2008: 34,091 were fully vested when issued). 
                                              2009                                 2008
                                       Number of        Weighted             Number of        Weighted
                                   Share options         average         share options         average
                                                        exercise                              exercise
                                                    price (in £)                          price (in £)
                                                                                        
 Outstanding at beginning of         10,170,536             0.23          10,136,445              0.23
 period                                                                                 
 Granted during the period             3,358,333            0.13                34,091            0.22
 Forfeited during the period         (1,025,000)            0.25                     -               -
 Outstanding at the end of the       12,503,869             0.20          10,170,536              0.23
 period                                                                                 
 Exercisable at the end of the        8,012,840             0.20           4,302,317              0.23
 period                                                                                 

22.  Share-based payments, (continued)

The options are recorded at fair value on the date of grant using the Black-Scholes model.  The inputs into the model are as follows:
                                                    2009                       2008
                                                     US$                        US$
                                                          
 Weighted average share price                       0.21                       0.48
 Weighted average exercise                          0.21                       0.44
 price                                                    
 Expected volatility                             57%-58%                        39%
 Expected life                                5-10 years                    5 years
 Risk free rate                            2.32% - 3.90%                      3.49%
 Expected dividends                                  -                          -  

Expected volatility was determined by calculating the historical volatility of the Group's share price from the date of listing to the end of the year.  

In 2009, options were granted on 24 March, 12 May, 7 August, 17 September, 3 November, 9 December, 28 December. The aggregate of the estimated fair value of the options granted on those dates is US $461,073.  In 2008, options were granted on 4 April.  The aggregate of the estimated fair value of the options granted on that date was US $6,965.  

The Company and Group recognised total costs of US $805,752 and US $701,195 relating to equity-settled share-based payment transactions in 2009 and 2008 respectively.  In 2009, the US $805,752 was expensed in the income statement during the period.

23.  Retirement benefit plans

The Company established a defined contribution plan under Section 401(k) of the Internal Revenue Code.  The plan enables qualified employees to reduce their taxable income by contributing up to 15% of their salary to the plan.  The Company may elect to make a matching contribution to the plan.  The Company has elected not to make a contribution for the years ended 31 December 2009 or 2008.

The UK subsidiary has a defined contribution pension scheme.  The total pension expense recognised in the income statement of US $22,549 (2008: US $26,715) represents contributions paid by the Company to the plan.

24.  Events after the balance sheet date

In January and February 2010, the Company made advances of US $145,500 under a promissory note from Motif BioSciences, Inc.

In January, February and March 2010, the Company made advances of US $250,000 under a promissory note from m2m Imaging Corporation.

In January, February and March 2010, the Company made advances of US $426,135 under a promissory note from PrivateMarkets, Inc.

In January 2010, the Company made advances of US $238,000 under a promissory note from Wellgen, Inc.

In January and February 2010, the Company issued £858,722 (US $1,388,341) of convertible promissory notes.

25.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.  Details of transactions between the Group and other related parties are disclosed below.

During the year, the Group paid miscellaneous expenses on behalf of Motif BioSciences, Inc. ("Motif") such as office expenses.  Motif paid miscellaneous expenses relating to the Kuwait activity on behalf of the Company.  At 31 December 2009, the net amount owed by the Group to Motif is US $4,860 (2008: US $39,158).  

Amphion Innovations US Inc., a subsidiary of the Company, has entered into an agreement with Axcess International, Inc. ("Axcess") to provide advisory services.  Richard Morgan and Robert Bertoldi, Directors of the Company, are also Directors of Axcess. Amphion Innovations US Inc. will receive a monthly fee of US $10,000 pursuant to this agreement.  The agreement is effective until 1 March 2010 and will renew on an annual basis until terminated by one of the parties.  The monthly fee is suspended for any month in which Axcess' cash balance falls below US $500,000.  Amphion Innovations US Inc. received US $0 for the year ended 31 December 2009 (2008: US $20,000) on the basis that the cash has fallen below the US $500,000 level.   In October 2009, the Company signed a commitment to invest an additional US $500,000 in Axcess International Inc.  At 31 December 2009, US $400,000 remains payable.

Amphion Innovations US Inc. has entered into an agreement with Kromek (Durham Scientific Crystals, Ltd.) to provide advisory and consulting services.  Richard Morgan, a Director of the Company, is also a Director of Kromek.  The monthly fee under this agreement is the lesser of US $10,000 and 50% of the gross compensation paid to Directors and management of Kromek in that month. The agreement renews annually unless terminated by one of the parties.  The subsidiary's fee for the year ended 31 December 2009 was US $120,000 (2008: US $120,000).  Amphion Innovations US Inc. also received US $69,368 as a fund raising fee for the year ended 31 December 2009 (2008: US $113,876). At 31 December 2009, $10,000 remains payable.

Amphion Innovations US Inc. has entered into an agreement with FireStar Software, Inc. ("FireStar") to provide advisory and consulting services.  Richard Morgan, a Director of the Company, is also a Director of FireStar.  The annual fee under this agreement is US $120,000 and expires 1 January 2010 unless renewed by the mutual consent of both parties.  The fee for the year ended 31 December 2009 and 2008 was suspended and not recognised.  

Amphion Innovations US Inc. has entered into an agreement with Motif BioSciences, Inc. ("Motif") to provide advisory and consulting services.  Richard Morgan, a Director of the Company, is also a Director of Motif.  The annual fee for the services is US $240,000.  The agreement is effective until 1 April 2010 and shall automatically renew for successive one year periods.  Amphion Innovations US Inc.'s fee for the period ended 31 December 2009 was US $240,000 (2008: US $240,000).  At 31 December 2009, US $600,000 of the advisory fee remains payable by Motif (2008: US $360,000).

Amphion Innovations US Inc. has entered into an agreement with Myconostica Ltd. ("Myconostica") to provide advisory and consulting services.  Richard Morgan, a Director of the Company, is also a Director of Myconostica.  The monthly fee for the services was £4,500.  The fee agreement was amended on 21 April to £3,000 per month.  The fee was again amended in September to £5,000 per month to cover Jerel Whittingham's appointment as Executive Chairman.  The subsidiary's fee for the year ended 31 December 2009 is £49,500 or US $75,761 (2008: £77,063 or US $141,030) of which US $37,184 (2008: US $6,500) remains payable at 31 December 2009.  Amphion Innovations US Inc. also received US $158,637 as a fund raising fee in 2008.

Amphion Innovations US Inc. has entered into an agreement with m2m Imaging Corp. ("m2m") to provide advisory and consulting services.  Robert Bertoldi, a Director of the Company, is also a Director of m2m.  The monthly fee under this agreement is US $15,000.  This agreement renews on an annual basis until terminated by either party.  Amphion Innovations US Inc.'s fee for the period ended 31 December 2009 was US $180,000 (2008: US $180,000) of which US $270,000 remains payable at 31 December 2009 (2008: US $90,000).  Amphion Innovations US Inc. also received US $130,000 as a fund raising fee in 2008.

Amphion Innovations US Inc. has entered into an agreement with WellGen, Inc. ("WellGen") to provide advisory and consulting services.  Richard Morgan and Robert Bertoldi, Directors of the Company, are also Directors of WellGen.  The fee under this agreement is US $60,000 per quarter.  The agreement renews annually until terminated by either party.  The subsidiary's fee for the year ended 31 December 2009 was US $240,000 (2008:  US $240,000) of which US $120,000 (2008:  nil) remains payable at 31 December 2009.  

25.  Related party transactions, (continued)

Amphion Innovations US Inc. has entered into an agreement with PrivateMarkets, Inc. ("PrivateMarkets") (formerly Energy Trading Inc.) to provide advisory services.  Richard Morgan, a Director of the Company, is also a Director of PrivateMarkets.  The fee under this agreement is US $30,000 per quarter until the successful sale of at least US $3,000,000 and thereafter, US $45,000 per quarter.  This agreement will renew annually unless terminated by either party.  The subsidiary's fee for the year ended 31 December 2009 was US $120,000. At 31 December 2009, US $ 305,000 (2008: US $185,000) remains payable by PrivateMarkets.  Amphion Innovations US Inc. also received US $109,450 as a fee in 2008.

Amphion Innovations US Inc. has entered into an agreement with DataTern, Inc. ("DataTern") (a wholly owned subsidiary of the Company) to provide advisory and consulting services.  Richard Morgan and Robert Bertoldi, Directors of the Company, are also Directors of DataTern.  The quarterly fee under this agreement is US $60,000 and renews annually unless terminated by either party.  The subsidiary's fee for the year ended 31 December 2009 is US $240,000 (2008: US $240,000).  In 2009, the Company issued notes payable to DataTern totaling $317,000 in consideration of loans from DataTern to the Company.

In November 2009 Richard C.E. Morgan, a Director of the Company, advanced US $250,000 to the Company.  This advance is interest free and repayable on demand.  The net amount payable by the Company at 31 December 2009 to Richard C.E. Morgan is US $479,746.

Directors' interests

The Directors' direct ownership in the Partner Companies is as follows:

                                Fully diluted %

Investment company        owned by Directors
                                  2009       2008
                             
 Axcess International, Inc.      8.00%      7.24%
 FireStar Software, Inc.         1.59%      1.62%
 Kromek                          1.50%      1.66%
 Motif BioSciences, Inc.         3.72%      3.81%
 Myconostica Ltd                 0.38%      0.34%
 PrivateMarkets, Inc.            2.75%      3.01%
 WellGen, Inc.                   4.74%      4.59%

The Directors who held office at 31 December 2009 had the following interests in the Company's ordinary share capital:

                                             2009                    2008                    2009                    2008                 2009                2008
                                                                                                                                                
                               Number of Ordinary      Number of Ordinary             Convertible             Convertible            Number of           Number of
                                                                                       Promissory              Promissory                       
                                           Shares                  Shares                   Notes                   Notes             Warrants            Warrants
                                                                                                                                                
 Richard M. Mansell-Jones              3,212,680                2,693,774                 £16,998                      -                18,868                   -
 Richard C.E. Morgan                 23,727,499               21,698,211                 £900,000                £900,000              999,999             999,999
 Robert J. Bertoldi                    6,436,431                5,674,844                       -                      -                     -                   -
 R. James Macaleer                   22,501,692               19,917,054                   £6,156                      -                 6,833                   -
 Anthony W. Henfrey                    1,159,485                                          £10,061                      -                11,168                   -
                                                     904,352                                                                                    
 Gerard Moufflet                          100,000             -                                 -                      -                     -                   -

25.  Related party transactions, (continued)

Aggregate Directors' remuneration

The total amounts for Directors' remuneration was as follows:
                               
                   Year ended          Year ended
             31 December 2009    31 December 2008
                          US$                 US$
 Emoluments           783,329           1,093,775

Directors' emoluments and compensation

                                Group          Group      Group     Year ended     Year ended
                           Fees/Basic    Benefits in     Annual    31 December    31 December
                               salary           kind    bonuses     2009 total     2008 total
                                  US$            US$        US$            US$            US$
 Name of Director                                                               
 Executive - salary                                                             
 Richard C.E. Morgan          178,615         13,431    100,000        292,046        529,243
 Robert J. Bertoldi           185,954         18,032     12,000        215,986        404,532
 Non-executive - fees                                                           
 Richard M. Mansell-Jones     103,137              -          -        103,137         70,000
 R. James Macaleer             53,929              -          -         53,929         35,000
 Anthony W. Henfrey            53,929              -          -         53,929         35,000
 Ronald E. Thomas              10,000              -          -         10,000         20,000
 Gerard Moufflet               54,302              -          -         54,302              -
                                                                                
 Aggregate emoluments         639,866         31,463    112,000        783,329      1,093,775

The annual bonuses were issued in shares of the Company.

Directors' share options

Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company granted to or held by the Directors.  Details of options for Directors who served during the year are as follows:

                                                                                                                                      Date from  
         Name of                                              1 January                                 31 December    Exercise           which              Expiry
        Director                Scheme                             2009                Granted                 2009       price     exercisable                date
                                                                                                                                                 
 Richard Morgan     2006 Unapproved Share Option Plan         2,000,000                      -           2,000,000      £0.2300     1 July 2011        30 June 2021
 Richard Morgan     2006 Unapproved Share Option Plan                 -                500,000              500,000     £0.1075     24 Mar 2010       14 March 2019
 Robert Bertoldi    2006 Unapproved Share Option Plan         1,250,000                      -           1,250,000      £0.2300     1 July 2011        30 June 2021
 Robert Bertoldi    2006 Unapproved Share Option Plan                 -                350,000              350,000     £0.1075     24 Mar 2010       14 March 2019
                                                              3,250,000                850,000           4,100,000                               

 

Notice

The financial information set out above does not constitute the group's statutory accounts for the year ended 31 December 2009 or 2008, but is derived from those accounts.  The auditors have reported on those accounts; their reports were unqualified, but did draw attention to matters by way of emphasis relating to significant uncertainty in respect of going concern and valuation of investments and other receivables for 2009 year end and in respect of going concern and valuation of investments for the 2008 year end, without qualifying their reports and did not contain statements under s. 15(4) or (6) Companies Act 1982 of the Isle of Man.

Approval

This statement was approved by the Board of Directors on 15 March 2010.

Copies of the Annual Report and Accounts

Copies of the Annual Report and Accounts will be sent to all shareholders.  Further copies will be obtainable from the Company's primary office: Amphion Innovations plc, Attn: Investor Relations, 330 Madison Avenue, New York, NY 10017, USA.  

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
FR KKPDKBBKBOND

RNS Number : 5491I Amphion Innovations PLC 15 March 2010

Amphion Partner Company, Kromek,

completes £12.3 million fund raising

London and New York, 15 March 2010 - Amphion Innovations plc (LSE: AMP) ("Amphion" or the "Company"), the developer of medical and technology businesses, today announces that its Partner Company, Kromek, which specialises in the development of disruptive technology solutions for a range of commercial markets including airport and border security, announces it has raised £12.3 million in the second close of the oversubscribed Series D financing.

The current financing has been raised from a predominantly private investor base, but investment has also been secured from corporate and institutional sources. Following this financing, Amphion now owns 17% of Kromek, on a fully diluted basis, which is now valued at £52 million.

The additional capital will provide Kromek with the opportunity to further expand its activities, through extension of its business facilities to enable further product development, as well as significantly enhance its commercial activities in its target market sectors.

Kromek has developed a family of products for the global aviation and border security markets to combat threats posed by liquid based explosives and smuggling of narcotics dissolved in alcohol. The company's bottle scanning product offers a unique solution to the current ban on the carriage of liquids, though airport terminals.

Kromek is set to capitalise on the EU's forthcoming regulation to lift the current ban, which will require airports to ensure that liquid scanning facilities are in place in transit areas at EU airports by April 2011, as a first step, before the ban.

Amphion CEO, Richard Morgan, said, "The ongoing security concerns worldwide create a critical need for innovative threat detection systems. The success of this fundraising round reflects investor confidence in Kromek's unique technology and provides the financial support for the company to continue its product and commercial development. I look forward to announcing further developments as the year progresses."

For further information please contact

Amphion Innovations plc Charlie Morgan, Director of Communications +1 (212) 210 6224

Cardew Group Tim Robertson/ James Milton/ Daniela Cormano +44 20 7930 0777

Charles Stanley(Nominated Adviser) Mark Taylor +44 20 7149 6000

About Amphion Innovations plc

Amphion (LSE: AMP) builds shareholder value in high growth companies in the medical and technology sectors, by using a focused, hands-on company building approach, based on decades of experience in both the US and UK. Amphion has significant shareholding in 10 Partner Companies developing proven technologies targeting substantial commercial marketplaces, each in excess of $1 billion. Each Partner Company is chosen with the goal of achieving an exit valuation in excess of $100 million.

On the web: www.amphionplc.com

About Kromek

Kromek was spun out of Durham University's physics department and specialises in the development of disruptive technology solutions for a broad range of commercial markets. It is currently pioneering digital colour imaging for x-rays and advanced 3D imaging for the medical, security, industrial inspection and defence markets. The company has successfully pioneered a revolutionary 3D x-ray technology which has huge commercial benefits for a range of sectors, especially the airline security industry, where it is uniquely placed to fulfil an increasing, necessary worldwide demand for liquid explosive detection at airports.

On the web: www.kromek.com

This information is provided by RNS The company news service from the London Stock Exchange

MSCSFWEDLFSSEFD

RNS Number : 1996I Amphion Innovations PLC 08 March 2010

Amphion Innovations plc

Notice of Preliminary Results - 16 March 2010

Amphion Innovations plc (LSE: AMP), which builds shareholder value in high growth companies in the medical and technology sectors, will announce its preliminary results for the year ending 31 December 2009 on Tuesday 16 March 2010.

Ends

For further information please contact:

Cardew Group

Tim Robertson/ Jamie Milton/ Daniela Cormano

+44 020 7930 0777

On the web: www.amphionplc.com

This information is provided by RNS The company news service from the London Stock Exchange

NORBIGDXRGGBGGU

RNS Number : 4999G Amphion Innovations PLC 02 February 2010

Amphion Innovations plc

Full Year Trading Update

· Net Asset Value per Share down approximately 4.5% year-on-year in US dollar terms / 13% in sterling
· Total revenue increased 22% to $8.6 million
· IP licensing revenue increased 39% to $7.6 million
· Gross profit increased 70% to $5.8 million.
· Operating loss down from $3.38 million to $0.88 million

· Operating profit of $10,000, excluding non-recurring items

· $4.2 million raised through Convertible Promissory Notes for further investment in and support of each of the Amphion Partner Companies

2 February 2010 - Amphion Innovations plc (LSE: AMP) ("Amphion" or the "Company"), announces that results for the 12 month period to 31 December 2009 are expected to show a small decrease in Net Asset Value ("NAV") in sterling to £0.26 being $0.42 (£0.30 and $0.44 as at 31 December 2008), broadly in line with market expectations. In absolute terms, 26p per share equates to a total NAV of £34 million. This valuation includes the wholly-owned subsidiary, DataTern, which generated the majority of Amphion's revenues through IP licensing this year and which has yet to be revalued from historic levels.

Amphion builds shareholder value in high growth companies in the medical and technology sectors by using a focused, hands-on company building approach, based on decades of experience in both the US and UK. Currently there are 8 Partner Companies developing proven technologies targeting substantial commercial marketplaces in excess of $1 billion. Each Partner Company aims to achieve a target exit value in excess of $100 million. The Amphion model has been refined to optimise the commercialisation of patents and other intellectual property within the Partner Companies. The Partner Companies collectively own or control over 200 separately identified pieces of intellectual property, a number which grows rapidly each year.

During the year, Amphion successfully raised an additional $4,238,340 through the placing of additional tranches of the Convertible Promissory Note first issued in late 2008. The goal is to raise up to *7 million of additional capital through the issue of these notes and at year end *4.86 million had been issued. A further *713,122 has been issued since 1 January 2010 and we expect to be able to place the balance of the Note by the end of the financial year. The main use of proceeds from this issue has been further investment in and support of each of the Amphion Partner Companies.

Amphion's intellectual property licensing programme made good progress over the course of the year. Amphion's wholly-owned subsidiary, DataTern, Inc., signed additional non-exclusive intellectual property license agreements with 14 leading international companies over the year, bringing to 18 the total number of licensees of the ORM technology. Revenue generated from IP licensing rose 39% to $7.6 million in 2009. Despite the continued success of this programme, only about $1.3 million of value is shown in our balance sheet (and Net Assets) for our intellectual property assets.

As a result of the success of the licensing programme, Amphion's total revenue increased by 22% to $8.66 million in 2009 and gross profit increased by almost 70% from $3,411,694 to $5,791,018. The loss from operations narrowed from $3,381,098 to $876,264 and excluding non-recurring items, the Company managed to record a profit, of a little over $10,000.

Despite the difficulties in the market environment during 2009, Amphion's Partner Companies continued to make progress and several important milestones were reached. Kromek's liquid detection systems offer complementary threat detection technologies to the full body scanning systems and conventional x-ray machines currently used in airports around the world that are aimed at detecting explosive materials, while also easing the restrictions on passengers passing through security checkpoints. Trials of Kromek's systems by leading government agencies in both the US and the UK are making steady progress and other markets are being actively explored for Kromek's revolutionary and proprietary digital x-ray technology. Kromek won the Global Security Challenge SME 2009 award in November 2009. Axcess successfully implemented its comprehensive security system at the Port of Spain in Trinidad and Tobago where the Fifth Summit of the Americas conference was held in April 2009. Axcess also recently announced it entered into an important partnership with HID Global, the leading supplier of access control systems in the world. Myconostica continues to make progress with the development and launch of its rapid diagnostic products for life threatening fungal infections. In June 2009, WellGen launched its first consumer products, a line of nutritional supplements under the brand name, TeAm?nd in December the company announced important pre-clinical progress in the development of its leading product which is being developed for the large unmet medical need in the use of medical foods for the management of diabetes.

Amphion has continued to develop its activities in the Middle East and a number of projects are currently under evaluation. In November, Amphion signed a partnership agreement with Kuwait University, the State's first and oldest University. This agreement is aimed at establishing and operating a Technology Transfer Unit ("TTU") at the University, which will be the first in-house TTU in Kuwait.

Amphion expects to announce its preliminary results for the 12 months to 31 December 2009, on 16 March 2010.

Richard Morgan, Amphion's Chief Executive Officer, said:

"2009 was a challenging year for businesses worldwide and Amphion found itself in a very tough environment. Our model depends in part on being able to gain access to capital to fund and grow our Partner Companies. With the public markets effectively closed for most of the year and the private capital markets also frozen, the challenges were great. In addition to the cautious stance and cost cutting measures Amphion and our Partner Companies have adopted since 2008, the continued success of our IP licensing programme has been a critical factor in getting the Company close to break-even for the year and to enable us to raise additional capital through the issue of the Convertible Promissory Note. These have been key factors in allowing Amphion to help our Partner Companies to keep moving forward. The outlook for continued progress in our IP licensing activity remains positive and we are committed to growing and strengthening this side of our business. We continue to believe that a number of our companies should be ready to approach the IPO market as and when it revives."

For further information please contact:

Amphion Innovations

Charlie Morgan:

+1 (212) 210-6224

Cardew Group

Tim Robertson/ Jamie Milton/Daniela Cormano:

+44 020 7930 0777

Charles Stanley Securities, Nominated Adviser

Mark Taylor/ Freddy Crossley:

+44 020 7149 6000

About Amphion Innovations plc*

Amphion (LSE: AMP) builds shareholder value in high growth companies in the medical and technology sectors, by using a focused, hands-on company building approach, based on decades of experience in both the US and UK. Amphion has significant shareholding in 8 Partner Companies developing proven technologies targeting substantial commercial marketplaces, each in excess of $1 billion. Each Partner Company is chosen with the goal of achieving an exit valuation in excess of $100 million. The Amphion model has been refined to optimise the commercialisation of patents and other intellectual property within the Partner Companies. The Partner Companies collectively own or control over 200 separately identified pieces of intellectual property, a number which grows rapidly each year.

On the web: www.amphionplc.com

This information is provided by RNS The company news service from the London Stock Exchange

TSTSSFFUFFSSEIE