"The last quarter of the financial year was extremely active as we concluded preliminary agreements to supply our systems to two major operations - namely Nokia and Egg (the Internet bank) - completed the acquisition of 101010 Ltd (the e-business solutions company), concluded an agreement to sell control of the Zabadoo operation and doubled the number of company employees to over 120 people.
The increase in number of employees is in line with previous announcements to shareholders, as well as with the business plan. We are anticipating a greatly increased demand for our implementation teams to enable the banks, telcos and portals to use the EarthPort systems. It is our stated policy to proliferate the systems as quickly as possible, particularly in the EU, and we are actively looking for opportunities to expand our operations. The expansion of the last six months has put pressure on us to look for more space and we expect to move premises before the end of this calendar year. The challenge is to achieve the move economically.
Earlier this year EarthPort announced its intention to dispose of all or part of the Zabadoo business in order to ensure focus on building the EarthPort payment system. Agreement has now been reached whereby a consortium of European investors, led by Adriaan Brink, a director of EarthPort, which intends to implement a phased acquisition of the business of Zabadoo, will begin the process with the acquisition of 20% of the Zabadoo business and the grant of a 10 year sub-licence by EarthPort of the development and marketing rights in respect of PLUS Lotto.com and other lottery game arrangements. EarthPort will no longer be required to fund the business of Zabadoo.
The acquisition of 101010 Ltd allows EarthPort to provide turnkey portal and virtual exchange functionality for banks, wireless operators, digital television operators, application service providers, ISPs, portals, merchants and their customers. The package encompasses the implementation of the EarthPort secure Internet payment system in conjunction with various financial, travel, shopping and personal organiser applications that can be delivered to businesses as "in-a-box solutions" or as extensible software applications.
The agreement with Nokia Networks OY allows for co-operation in the worldwide marketing of EarthPort's payment system to significant Nokia customers during the next two years. The agreement forms part of EarthPort's strategy to ensure more rapid distribution of the payment system via the m-commerce market. The program supports the development of Wireless
Application Protocol, Smart Messaging, and Computer Interface to Message Distribution (CIMD).
The Egg plc agreement, in which EarthPort was selected by Egg to test the functionality of a bespoke e-wallet system amongst a select number of e-merchants currently affiliated to Egg Shop, allows for the parties to work together to jointly test the product with the e-merchants.
We are pleased to advise that we have appointed Philip Lynch as a non-executive director. Mr Lynch has a distinguished business career that includes being CEO of ECHO, Managing Director of Lehman Bros in London, Chairman of International Petroleum Exchange (the first US citizen to chair an exchange in the City of London) and Director of the Securities and Futures Authority (SFA). He was awarded the CBE in recognition of outstanding service to the United Kingdom and was given Freedom of the City of London. We welcome the valuable contribution he will make to EarthPort.
The accounts for the year ended 30 June 2000 will be commented on in detail in the Annual Report and at the Annual General Meeting. To comment briefly on the attached Preliminary accounts, Intangible Fixed Assets have increased considerably, largely as a result of the intellectual property and software consolidated as a result of the 101010 acquisition, which also resulted in an increase in Share Premium Account. The increase in cash is the result of the share placement in March this year, which in turn resulted in the majority of the increase in Share Capital and Share Premium Account. Turnover is marginally ahead of forecasts made at the time of the share placement and approximately 40% ahead of the previous year. In the coming financial year we are budgeting to increase turnover considerably through the implementation of our payment system, but this is not likely to improve the Net Loss position until the year ended June 2002, when we are budgeting for EarthPort to be cash flow neutral.
Our corporate strategy should, subject to shareholder approval at the time of the Annual General Meeting, lead to a listing on the London Stock Exchange before the end of the year. In the meantime the Board is actively examining possible acquisitions that would accelerate the growth in shareholder value."