TIDMMDST
RNS Number : 7241M
Medicsight Plc
22 August 2011
Press release 22 August 2011
Medicsight PLC
("Medicsight" or "the Group")
Preliminary Findings of the Special Committee
Results of a Comprehensive Strategic Review
General Meeting on 14 September 2011 for Stockholder Vote to
Cancel Trading on AIM
Interim Results for the Six Months Ended 30 June 2011
Medicsight PLC (AIM: MDST), an industry leader in the
development of Computer-Aided Detection (CAD) and image analysis
software, announces the preliminary findings of the Special
Committee, results of a comprehensive strategic review including
actions taken by the Board of Directors, and Interim Results.
Preliminary findings of the Special Committee
On 8 July, Medicsight announced that it had initiated an
internal investigation through a Special Committee of the Board of
Directors regarding the potential misappropriation and/or
misdirection of Company funds. Based upon the substantially
complete results of the investigation, the Company has concluded
that no adjustments or restatement of prior issued financial
statements is required. Although the investigation remains
on-going, the Board is confident that the Company's financial
statements will not require a material restatement as a result of
any additional irregularities discovered in the future.
Furthermore, the Company intends to seek all possible methods of
recovery or restitution where appropriate and where the cost of
doing so will not be greater than the expected outcome.
Following the results of the investigation, the Board has
requested the recommencement of trading in the Company's ordinary
shares to trading on AIM with immediate effect.
Comprehensive Strategic Review
Staff reductions and office relocation in London to conserve
remaining cash in order to focus on existing products within
approved markets
In order to maximize the opportunity for the Company's ColonCAD
software to succeed, particularly in the U.S. market, the decision
was made to streamline operations with regard to headcount and
overhead. Medicsight utilised its lease termination option at its
headquarters and will be moving shortly to more appropriate space.
Robert Ladd, Interim Chief Executive, commented: "As difficult as
this decision is, the only means of ensuring survival is to
increase our runway until profitability; with a finite amount of
cash, the only option is to reduce expenses. Many people worked
very hard to create and support our CAD medical software. These
cost cuts give hope for their vision to flourish. The Board will
continue to examine all opportunities to maximise value from the
Company's assets and generate value for shareholders."
Closing of Tokyo office
In late July 2011, Medicsight was informed by the Japanese
Ministry of Health, Labour and Welfare "MHLW" that several
statistical data errors were encountered in their review of the
Company's application for approval of its MedicRead software for
use in CT Colonography procedures. Following informal guidance from
MHLW, the Company has decided to withdraw the current submission
and is assessing the next course of action. In the meantime, the
Board of Directors has decided to close the Tokyo office as part of
the overall streamlining of operations and expense reductions.
Corporate organisational restructuring
In addition to Tokyo, the Board of Directors has decided to
close several other Company subsidiaries in Australia, China and
the UAE. The legal, regulatory and accounting costs of maintaining
so many legal entities cannot be justified at this point. However,
in order to better exploit the recent U.S. Food and Drug
Administration approval of ColonCAD, the Company will reopen
Medicsight, Inc. in New York.
Stockholder vote to delist from AIM
Medicsight's Board of Directors will call a General Meeting of
stockholders on Wednesday 14th September 2011 to vote on whether to
cancel its Ordinary Shares from trading on the AIM Exchange and to
re-register as a private company.
Whilst the Directors were pleased to announce on 19 May 2011
that they had received clearance from the US Food and Drug
Administration for its ColonCAD(TM) API, this also led the Board to
conduct a full review of its operations and future strategy. The
Board is very mindful that the Company has had minimal revenues
since inception and is equally aware of the risks inherent in the
commercialisation of emerging and new technologies in the US
markets at the current time. Full commercialisation of the ColonCAD
API without a committed, US based, commercialisation partner, would
involve the Company in significant incremental costs in terms of a
sales, marketing and training platform in the US.
The Board is very aware that the ability to raise money in the
equity markets at the current time is very limited, particularly
for smaller companies. The Directors have accordingly concluded
that conservation of existing cash resources must be the Board's
first priority at the current time. The Board considers that the
costs associated with the Company's quotation on AIM are large and,
in the opinion of the Board, are not economically justified given
the very low volumes of trading in the Company's Ordinary Shares.
The Directors have decided to put a resolution to Shareholders for
the termination of the AIM trading facility as part of the current
austerity measures.
The Company has applied to the London Stock Exchange for the
Cancellation and it is expected that, subject to the approval of
Shareholders at the GM by Special Resolution, the Cancellation will
become effective on 22 September 2011. If the resolution is passed
and the Cancellation becomes effective there will no longer be any
public market in the Company's Ordinary Shares. It is not the
intention of the Company to support any off-market or matched
bargain facilities in the Ordinary Shares although certain
stockbrokers or market intermediaries may be able to offer such
services to Shareholders.
Should the delisting be approved, it is the intention of the
Board to keep shareholders updated via its website.
It is expected that a full copy of the circular will be sent to
shareholders on 23 August 2012 and will be available on the
Company's website at www.medicsight.com.
On 16 August 2011, Peter Venton resigned from the Board of MGT
Investments Inc. ("MGT"), the Company's majority shareholder. This
action has been taken to ensure that one Board member is
independent of MGT. In light of the announcement of the proposals
to cancel the AIM quotation it was considered impracticable to
recruit any further independent directors for the Company at the
current time, however, should shareholders resolve not to pass the
resolutions to effect the cancellation of the AIM quotation the
Board will take steps to supplement its current constitution with
an additional independent non-executive director.
Interim results for the six months ended 30 June 2011
Highlights
-- Received U.S. Food and Drug Administration ("FDA")
510(k) clearance to market ColonCAD in the U.S.
on 19 May
-- Received EU (CE) approval and launched ColonCAD
4.1 on 25 March
-- Revenue decreased to GBP162,000 (2010: GBP215,000)
-- Operating costs increased to GBP2,703,000 (2010:
GBP2,622,000)
-- Group cash balance at 30 June 2011 of GBP3,399,000
(2010: GBP8,282,000)
Medicsight has received its FDA clearance to market ColonCAD in
the United States and is working with its partners to establish
reference centres and to begin generating initial sales. In the six
months ended 30 June 2011, ColonCAD sales decreased compared to the
previous year and sales of the MedicCO(2) LON insufflator system
decreased marginally.
Operating expenses were slightly higher than the previous year
due to the costs of professional fees relating to the response to
FDA, third party work on product development and severance costs
relating to previous reductions in employment.
As at 30 June Medicsight's cash balance was GBP3,399,000. In
order to preserve cash and maximise the potential U.S. market, we
have begun implementing a company-wide expense reduction program as
stated above. We expect to see a reduction in total expenses in the
second half of this year.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2011
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ -------------
Revenue
Licence and support fees 162 215 350
Cost of sales (62) (75) (75)
Gross profit 100 140 275
Sales and marketing expense (370) (421) (907)
Administrative expenses (1,808) (1,460) (2,942)
Research and development (455) (597) (985)
Share-based expense (70) (144) (219)
Operating loss (2,603) (2,482) (4,778)
Finance revenue 20 23 41
Loss before taxation (2,583) (2,459) (4,737)
Income tax benefit / (expense) - - 217
Loss for the period and
Total comprehensive income
attributable to owners of
the parent (2,583) (2,459) (4,520)
Loss per share - basic and
diluted (2p) (2p) (3p)
FOR THE SIX MONTHS ENDED 30 JUNE 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December
30 June 2011 30 June 2010 2010
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ------------
ASSETS
Current assets
Trade and other receivables 731 315 369
Cash and cash equivalents 3,399 8,282 5,336
Loan receivable - related
party - - 734
4,130 8,597 6,439
Non-current assets
Property, plant and equipment 65 70 81
65 70 81
Total assets 4,195 8,667 6,520
LIABILITIES
Current liabilities
Trade and other payables (583) (556) (395)
Total liabilities (583) (556) (395)
Net assets 3,612 8,111 6,125
SHAREHOLDERS' EQUITY
Issued share capital 7,776 7,776 7,776
Share premium 57,306 57,306 57,306
Share-based expense reserve 3,347 3,202 3,277
Retained earnings (64,817) (60,173) (62,234)
Equity attributable to
owners of the parent 3,612 8,111 6,125
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED 30 JUNE 2011
6 months 6 months Year ended
ended ended 31 December
30 June 2011 30 June 2010 2010
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
---------------------------- -------------- -------------- -------------
Cash flows from operating
activities
Cash used in operations (2,692) (2,416) (4,611)
Net cash from operating
activities (2,692) (2,416) (4,611)
Cash flows from investing
activities
Loan receivable - related
party 718 - (734)
Purchase of equipment - (30) (57)
Interest received - 24 37
Net cash used in investing
activities 718 (6) (754)
Effects of exchange rate
changes 37 (4) (7)
Net decrease in cash and
cash equivalents (1,937) (2,426) (5,372)
Cash and cash equivalents
at 1 January 5,336 10,708 10,708
Cash and cash equivalents
-------------- -------------- -------------
at period end 3,399 8,282 5,336
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Share-based Currency
Share Share payment translation Retained Total
Capital Premium reserve reserve earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- ------- ----------- ----------- -------- -------
At 1 January
2010 7,776 57,306 3,058 - (57,714) 10,426
Loss for the
period - - - - (2,459) (2,459)
Total
comprehensive
income - - - - (2,459) (2,459)
Transactions
with owners -
equity
settled
Share-based
expense - - 144 - - 144
At 30 June
2010 7,776 57,306 3,202 - (60,173) 8,111
Loss for the
period - - - -
Net exchange
adjustments - - - - - -
Total
comprehensive
income - - - - (2,061) (2,061)
Transactions
with owners -
equity
settled
Share-based
expense - - 75 - - 75
At 31 December
2010 7,776 57,306 3,277 - (62,234) 6,125
Loss for the
period - - - -
Net exchange
adjustments - - - - - -
Total
comprehensive
income - - - - (2,583) (2,583)
Transactions
with owners -
equity
settled
Share-based
expense - - 70 - - 70
At 30 June
2011 7,776 57,306 3,347 - (64,817) 3,612
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2011
1. Basis of preparation of interim financial information
These interim consolidated financial statements are for the six
months ended 30 June 2011. The interim financial report, which is
unaudited, has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
and IFRIC interpretations adopted for use in the European Union
(IFRS). The accounting policies and methods of computation used are
consistent with those used in the Group annual report for the year
ended 31 December 2010 and are expected to be used in the Group
Annual Report for the year ended 31 December 2011.
In the period, MedicCO(2) LON Limited, a subsidiary of the
group, made the first sales of its CO(2) insufflation device. The
revenue from the device is recognised as goods and orders are
satisfied, and goods are delivered.
The financial information for the year ended 31 December 2010
does not constitute statutory information. A copy of the statutory
accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on these accounts was not qualified
and did not contain statements under section 498(2) and (3) of the
Companies Act 2006.
The interim consolidated financial statements are presented in
pounds sterling because that is the currency of the primary
economic environment in which the group operates. All values are
rounded to the nearest thousand pounds (GBP000) except when
otherwise stated.
Going concern
The Group is loss making and has yet to make meaningful
revenues. Despite U.S. FDA clearance in May 2011, the group may
need to raise additional capital to fully exploit this approval. In
addition, any potential resubmission to MHLW may also require
additional capital. In light of this, the directors have reviewed
cash flow forecasts and the Group's capital and liquidity
requirements for the balance of 2011 and for 2012. The directors
have considered various scenarios and have concluded that
aggressive cost controls are necessary. These actions as outlined
above should allow that with the remaining cash available and the
ability to further manage expenditure rates, the accounts should be
prepared on a going concern basis.
2. Segment Reporting
The Group operates in two business areas. Our primary business
is the development and commercialisation of medical imaging
software. To complement this business the Group has launched the
MedicCO(2) LON Insufflator, a hardware product that is used to
introduce carbon dioxide gas to distend the colon when patients are
undergoing a CT colonography examination. This results in improved
image quality and supports diagnostic interpretation.
Operating results are reported to the Group's chief operating
decision maker on a geographical basis. As a new business our
MedicCO(2) LON business operates through a new subsidiary in the
UAE. The following reports financial information on a geographical
basis and reconciles it to the Group's results.
All other
UK & Europe Japan UAE segments Total
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ------------ -------- -------- ---------- --------
6 months ended
30 June 2011
Revenue 37 - - 125 162
Depreciation 10 8 - - 18
Operating loss (2,199) (337) (57) (10) (2,603)
Interest receivable 7 6 7 - 20
Non-current assets 24 41 - - 65
Segment assets 3,773 219 193 10 4,195
Segment liabilities (426) (27) (125) (5) (583)
Tax Income - - - - -
Share-based payment 66 4 - - 70
Capital Additions - - - - -
All other
UK & Europe Japan UAE segments Total
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ------------ -------- -------- ---------- --------
6 months ended
30 June 2010
Revenue 74 - 141 - 215
Depreciation 8 8 - 1 17
Operating loss (1,773) (433) (266) (10) (2,482)
Interest receivable 23 - - - 23
Non-current assets 8 60 - 2 70
Segment assets 8,337 282 43 5 8,667
Segment liabilities (427) (38) (89) - (556)
Tax Income 110 - - - 110
Share-based payment 135 9 - - 144
Capital Additions 4 20 - - 24
--------------------- ------------ -------- -------- ---------- --------
All other
UK & Europe Japan UAE segments Total
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ------------ -------- -------- ---------- --------
12 months ended
31 December 2010
Revenue 210 - 140 - 350
Depreciation 17 20 - - 37
Operating loss (3,442) (829) (485) (22) (4,778)
Interest receivable
/ (paid) 34 (17) 24 - 41
Non-current assets 33 48 - - 81
Segment assets 5,514 247 751 8 6,520
Segment liabilities (346) (36) (5) (8) (395)
Tax Income 217 - - - 217
Share-based payment (209) (10) - - (219)
Capital Additions 37 20 - - 57
--------------------- ------------ -------- -------- ---------- --------
3. Earnings per share
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
(unaudited) (unaudited) (audited)
------------------------ --------------- --------------- ------------------
Loss for the period
(GBP000) (2,583) (2,459) (4,520)
Weighted average number
of ordinary shares
(000) 155,525 155,525 155,525
Loss per ordinary
share
- basic and diluted (2p) (2p) (3p)
The loss per share is based on the weighted average number of
ordinary shares in issue during the year. The Group has recorded a
loss in all periods. No adjustment has been made to the basic loss
per share, as the exercise of the share options would have the
effect of reducing the loss per ordinary share and is
anti-dilutive.
4. Share options
The Group has granted share options to eligible employees since
2003.
A summary of the movement on the Group's share option plans
is:
30 June 2011 31 December 2010
Number of Weighted-average Number of Weighted-average
shares exercise price shares exercise price
---------------- ----------- ---------------- ---------- ----------------
Start of period 13,703,334 GBP0.13 9,128,359 GBP0.20
Granted - GBP0.00 5,475,000 GBP0.05
Forfeited (3,429,167) GBP0.06 (900,025) GBP0.39
Exercised - - - -
At period
end 10,274,167 0.15 13,703,334 GBP0.13
Exercisable
at period
end 5,646,851 0.21 4,928,052 GBP0.24
The following data summarises the status of the share options
outstanding at 30 June 2011:
Remaining contractual
Share Option
Plan Number life (years)
-------------- ----------- ----------------------
A - nil
B 150,000 3.2
C 85,000 4.6
D - nil
E 790,000 5.6
F 50,000 5.9
G 150,000 6.5
H - nil
I 100,000 7.5
J 5,689,167 7.9
K - 7.9
L 100,000 8.5
M 3,160,000 9.5
10,274,167
Options are fair valued using the Black-Scholes option pricing
model. No performance conditions were included in the fair value
calculations. There were no new options issued in the period.
In the period ending 30 June 2011 the Group recorded a share
option charge of GBP70,000 (30 June 2010: GBP144,000).
5. Related Parties
The Group has related party relationships with its subsidiaries,
its parent company (MGT Capital Investments, Inc.), directors,
employees and subsidiary companies of its parent Group.
Other subsidiary companies of the parent also operate from 66
Hammersmith Road, London and some establishment, finance, IT and
administration costs are charged to, and from, these companies. In
the six months to 30 June 2011 MGT Capital Investments (UK) Ltd.
charged the Group GBP159,000 (30 June 2010: GBP345,000), and the
Group charged MGT Capital Investments (UK) Ltd GBP30,000 (30 June
2010: GBP14,000). At 30 June 2011, the Group owed MGT Capital
Investments (UK) Ltd the balance of GBP20,745 (30 June 2010:
GBP2,678).
6. Reconciliation of net cash flows from operating
activities
Year ended
6 months ended 6 months ended 31 December
30 June 2011 30 June 2010 2010
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
----------------------------- --------------- --------------- -------------
Loss for the period (2,583) (2,459) (4,778)
Adjustments for: -
Depreciation 16 17 37
Loss on disposal of
equipment - - 4
Loss on sale of investments - - -
Forgiveness/impairment
of trading balances
of related entities - - -
Interest income (13) (23) -
Interest expense - - -
Foreign currency exchange
cost - - -
Share options 66 144 219
Changes in working capital - -
Trade and other receivables (365) 39 (15)
Trade and other payables 187 (134) (277)
Cash flows from operating
activities (2,692) (2,416) (4,810)
Interest paid - - (18)
Tax received - - 217
Net Cash flows from
operating activities (2,692) (2,416) (4,611)
- Ends -
For further information:
Medicsight plc
Robert Ladd, Interim CEO Tel: +44 (0)207 605 7950
U.S. Contact Details Tel: +1 (212) 652 3214
Troy Robinson, Chief Financial Officer
www.medicsight.com
follow us on twitter
@Medicsight
Daniel Stewart & Co
Noelle Greenaway / Oliver Rigby Tel: +44 (0) 207 776 6550
www.danielstewart.co.uk
Media enquiries:
Abchurch
www.abchurch-group.com
Julian Bosdet Tel: +44 (0) 207 398 7700
julian.bosdet@abchurch-group.com
Adam Michael Tel: +44 (0) 207 398 7708
adam.michael@abchurch-group.com
Simone Elviss Tel: +44 (0) 207 398 7728
simone.elviss@abchurch-group.com
Quincy Allan Tel: +44 (0) 207 398 7710
quincy.allan@abchurch-group.com
This information is provided by RNS
The company news service from the London Stock Exchange
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