Global IP Solutions (fka GBIPF)

[plaintif2000]

Here is What is Important: (go to page 2)

http://www.gipscorp.com/files/english/2006_annualreport_english.pdf

Administration report
(in thousands)
The Annual Report refers to the Company’s fiscal year from the date January 1, 2006 to December 31, 2006.
Information about business activities
Global IP Sound AB (the Company) develops and markets software for the communications industry and
provides products and services that enable high quality, real-time communications over packet networks. The
Company operates its business in the US, Europe and Asia through its subsidiary, Global IP Sound Inc. In the
first quarter of 2007, Global IP Sound Inc. changed its name to Global IP Solutions Inc.
Revenues for the year were SEK 126,032, a 91 percent increase over 2005. Royalty revenue increased during the
year to 45 percent of total revenue, up from 32 percent of revenue in 2005. Operating expenses were SEK 52,522,
a 25 percent increase over the previous year. Operating Profit for the year was SEK 57,071 compared to SEK
12,908 in 2005.
The Company reported a Result after Financial Items of SEK 61,057 for the year, compared to 14,643 in 2005.
The improved performance was the result of increased sales volume, a focus on cost containment, and the positive
impact of two non-standard events. The Company favorably settled a lawsuit of 22,040 SEK and received other
income of 6,375 SEK in connection with a new share issue in a subsidiary to employees due to an option
program. The Company later repurchased most of these shares, which led to goodwill of 18,001 SEK
The Company posted a Net Result of SEK 64,617 in 2006, compared to SEK 13,319 for the prior year. The
Company’s Net Result, excluding the effect of the two non-standard events mentioned above, would have been
approximately SEK 46,132. As of December 31, 2006, Cash and Equivalents were SEK 108,297. Given the
improved earnings during the year, the Company has recognized further deferred tax assets of 4,770 SEK
During 2006, the Company signed agreements with numerous customers such as Oracle, Texas Instruments, SK
Communications, Siemens, and many others. Market position was again improved, and the Company now has
over 150 active customers worldwide.
The GIPS product portfolio continued to expand in 2006 with the introduction of Border Interface Engine and
Network Interface Engine, two new products that handle de-jittering and transcoding for server-based products
and gateway solutions, and a new version of the iSAC codec that is optimized for use in hardware devices. The
company signed an exclusive license agreement with Espre Solutions for their video technology, which is now
integrated into the company’s existing product portfolio. The company expanded its patent portfolio to include 9
mature patent applications granted in various jurisdictions, and filed two new patent applications for conference
mixing and codec technology. At year-end, GIPS employed 27 engineers, and will continue to invest in
developing technologies and products to maintain its industry leading position.
The Company remains optimistic about the future. Strategic relationships have been strengthened with previously
existing customers, such as Nortel, Marvell, Yahoo!, IBM, and others. Expanded product offerings, continued
growth in the VoIP market, a healthy cash position, and the acquisition of Crystal Voice Communications
position the company for strong growth potential in 2007.
During 2006, a new share issue was completed, which raised 12,400 SEK of new capital for the Company (see
footnote 17), primarily from warrants exercised by the Company’s former CEO. The Company is expecting
improved cash flow from operations in 2007. The Company’s shares are traded on the unquoted list at the Oslo
Stock Exchange in Oslo, Norway.
The Company’s registered office is located in Stockholm, Sweden.