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Investor News
JUNE 2006
a quarterly update on the key activities of Medify Solutions Limited
Dear Investor
Welcome to Medify Solutions’ second quarter Investor Update, we hope you continue to
find these useful and informative.
This update is for the period up to and including the end of June 2006.
Outside of this quarterly cycle, if significant news concerning the business occurs, in
accordance with SEC interim reporting obligations, the company will issue press
releases and disclosers pertinent to such events.
1. Developments since the last Statement
1.1 Statutory Overview
A review is currently ongoing by the recently appointed Company Secretary Dr. Gayle Hanlon to
ensure that all US and UK requirements have been met. This will include historic fillings and
ongoing procedures, This as a pre-requisite for the company to focus on the core business
moving forward without some of the more complicated structural arrangements of the past, and
to pursue a higher board listing. This will encompass the updating, filing, accuracy, consistency
and compliance with US accounting standards.
The Annual Accounts for the year ending 31st December 2005 for the UK Company are
currently with the UK auditors; Edwards, Pearson and White.
1.2 Chairman’s Statement
“It gives me great pleasure to comment on what is the last quarterly report from the Medify
Group as a start up project. The next quarterly will not only be a report on revenue, (the NHS
roll out 1st September), but will be a report on success and reward for all associated with the
Group; this is a document I am looking forward to signing off. I would like to list the
achievements over the past quarter and thank those involved, led by new Group CEO Ian
O'Reilly.
• New Company Structure
• Wholly owned and developed product and IPR
• Customer service team set up
• In-house technical development team
• Confirmation from our NHS customers of the Go Live date
• Expansion of the planned first wave NHS customer base three fold
• New commercial model delivering Gross profit margin of 78%
• Strategic commercial plans developed with core business partners
This has truly been a successful quarter and provides great encouragement as we move to
within two weeks of the UK go live date and revenue."
Jonathan Bryant - Executive Chairman
1.3 General Outlook
A fundamental step-change has occurred across the Medify business in the past quarter. Major
progression has been made concerning management team, staffing, commercial model and
core product proposition. The resultant commercial model improvements will deliver 78% gross
profit margin. At present, revenue streams will commence from 1st September onwards, when
the company makes the transition from start-up project to operational business.
The general opinion is that Medify Solutions quoted share price remained undervalued
throughout the quarter. To illustrate this point, the initial rollout in Doncaster PCT UK has
projected revenue of circa $5.1million annually; which is 1% of the UK market for Medify
Remote. Thus, the Directors believe that the suppression of the share price throughout the
quarter at sub-10c, not representative of the true Company valuation.
2. European Subsidiary IPO
A slight delay has occurred in the original aggressive timetable for the floatation of the
subsidiary on the DAX Frankfurt stock exchange and associated share dividend.
A full public announcement will occur on the confirmed IPO in due course. This will include
investor information as to options, benefits and implications.
3. Business Update
3.1 Core Product
During the quarter the strategic decision was taken to replace the legacy Pervasic technical
component with an in-house Medfiy wholly owned solution. This represents a huge leap forward
for Medify providing full ownership of product direction, intellectual property, commercial
execution and margin enhancement. The first release of this is covered in Lines of Business
below.
3.2 UK Lines of Business
Primary Care Trusts in The National Health Service (NHS) – update
Phase One Rollout
During the quarter a complete re-launch of the rollout project has occurred with the NHS and
specifically Doncaster Central PCT. The NHS Steering Group approved the updated first
delivery schedule for 1st September 2006 and formally signed off the Requirements
Specification document produced by Medify Solutions. The first rollout site will be the
Kingsthorne Practice led by Dr. Martyn Coleman and Dr Nick Tupper. The rollout will then
expand to cover community nursing staff as rapidly as practical. Joanne Webster, Director of
Strategic Development, Doncaster Central PCT, comments, “For Doncaster, having taken the
lead with the project for the NHS, using the application for live healthcare provision is very
exciting, especially with the go live schedule now confirmed.”
The summary timeline is illustrated below:
Aug 2006 Sep t 2006 Oct 2006 July 2006
ME DIFY V2: DONCAS TER PCT TIMELINE MEDIFY V2 : DONCASTE R PCT TIMELINE
Java Game boxes
Functio nal
Re quiremen ts
Te chnical
Red esign
Re -co nfig. &
Build
UAT
(User
Acceptance
Testi ng)
Live Usag e
Inf ormat io n
& Review
As part of programme of consolidation of PCT’s in the UK, it is planned that Doncaster PCT will
become around three times larger in its area of responsibility. This expands the user base who
may be serviced in the rollout.
Expanded PCT usage
Currently around 390 PCT’s exist in the UK, planning has occurred throughout the quarter on
business development activities into these organizations for Medify Remote.
This represents a major channel to market and associated revenue streams. Sales and
marketing activities will occur as soon as the rollout across Doncaster PCT is at a level of
maturity to enable this.
UK Sales
Revenue Matrix
$millions
Approx number of
users
Approx % UK Market
share Approx Annual Revenue $m
Approx Gross profit
to Medify (78%)
2500 1 5.1 3.98
5000 2 10.2 7.96
7500 3 15.3 11.94
10000 4 20.4 15.92
12500 5 25.5 19.9
15000 6 30.6 23.88
17500 7 35.7 27.86
20000 8 40.8 31.84
Volume of Users v Gross Profit
0
10
20
30
40
5000 7500 10000 12500 15000 17500 20000
3.98
General Practitioners (GP’s) Direct – update
Medify Solutions partner EMIS provides around 70% of the clinical systems used in GP
practices in the UK. This equates to approximately 6000 sites and 120,000 users. The
contractual relationship between Medify and EMIS has certain obligations on both parties
relative to activities into this base. Business development planning has progressed to the point
of preparation to actively market, promote and sell Medify Remote direct to these GP surgeries.
Care In The Home (CITH) – update
Activities and discussions have begun during the quarter on the planned expansion of the use of
Medfiy Remote for access to patent records by home care workers. A major drive exists across
the NHS and local authorities to reduce the costs of residential care by caring for people in their
own homes. This requires the use of care plans and linkages to patent records. Currently, a
number of these initiatives are hampered by the lack of remote access to records and the
ineffective deficiencies of paper based systems.
3.2 Partner Status
CM Isitel Spa
The project for Italy is moving into the next phase whereby the commercial arrangements and
tendering process is underway for the Italian Healthcare market. Furthermore the company
through its partners is exploring the feasibility of developing a specific Healthcare hardware
device which will contain amongst other applications, remote access to patient records as a
standard application.
Upon the successful IPO of Medify Europe, a dedicated team will be charged with managing,
delivering and roll out of the project across Italy as the first stage of European expansion.
Oracle
As the original partners and sponsors of Medify into the Healthcare market the news of the
impending national roll out to our NHS customers of extremely exciting for both. It is further
testament to the partnership that as announced, not only will Medify be partnering with Oracle
on Medify Remote into Europe but also on an international basis. This is further evidence of the
support of the Medify Remote application and its value.
The ideal (and being discussed) scenario would be for the Medify Remote application to be
integrated with Oracle’s technology as standard. Due to Oracle’s position as the worlds leading
enterprise software company and as the contracted provider of server capability to the NHS.
This seems the logical solution not only for Oracle and Medify, but for the NHS as a whole.
Particularly as the Medify NHS roll out begins on the 1st September 2006. Furthermore, this
approach if proven to be successful, would be the benchmark and gold standard for a Global
offering of Medify Remote.
Vodafone
As has been published, the plans for Medify are to be a global concern and provide the product
portfolio to all healthcare markets. As we have demonstrated, the team works well and builds
strong relationships with global corporate partners. It is planned that Medify Remote will become
an approved application by Vodafone in due course. Therefore, Medify is actively exploring with
Vodafone the possibilities and potential of a partnership arrangement.
EMIS
EMIS are the most established of Medify's partners within the NHS in both the eductional and
mobile sectors. With the Go live date for the NHS looming, it is appropriate to point out the first
wave of NHS users will be EMIS customers through our existing contractual arrangements. Due
to the position that EMIS hold within the NHS and the obvious demand from EMIS customers,
Medify has set up a help line to accommodate any and all enquiries for the Medify Remote
which will be managed to ensure that the best delivery of service is provided for EMIS
customers.
4. Corporate Structure
4.1 Management Team
A number of changes have occurred over the past quarter, namely:
Ian O’Reilly – Group CEO
Dr Gayle Hanlon – Company Secretary
Kevin Drury – CTO
Andrew Harris – Head of Customer Support
From the 1st July 2006 Ian O’Reilly was appointed the Group CEO of the Medify Solutions group
of companies. One month into the role, O’Reilly provides the following assessment as to the
state of the business.
“It has been obvious from the outset of my involvement with Medify that massive potential exists
for the Company, the products and this emerging market. Having now been actively involved in
the past month, nothing I have uncovered is contrary to that viewpoint. Whilst for my leadership
of the management team it is relatively early days, the past month has seen the resolution of a
number of historic and long overdue issues. This has enabled the move of the business onto a
sounder commercial, administrative, delivery and operational footing.
As with all businesses at this stage of development, Medify have a long journey ahead,
however, I am confident that we now have a clear and achievable route plan to the delivery of
the short term and strategic goals that Medify must achieve. We remain on plan to deliver to the
UK NHS for the first week of September and the move to an in-house based product suite is
progressing to plan. All key strategic partners continue to be engaged on the Medify routes to
market, with a number of new relationships to be announced in due course”.
4.2 Subsidiaries
Plans remain in place to IPO the European subsidiary on the Frankfurt stock exchange (slightly
rescheduled) and the Asian Pacific subsidiary during the later half of 2006.
The new stock will NOT be restricted in any way, will be granted free only to existing Medify
shareholders and will be tradable on day one of the float.
All information required for the sale of stock will be provided to you in the formal written
notification, including brokers, dealers etc.
4.3 Financial Summary
PLEASE NOTE: The financial statements of the US company will be filed in due course.
Included in this report are the unaudited draft accounts of the UK legal entity only, for the
period 1st January 2006 to 30th June 2006 only.
MEDIFY SOLUTIONS LIMTED
UK TRADING
$USD
01/01/2006 to 06/03/06
SALES $2,956
DIRECT COST OF SALE $2,379
GROSS PROFIT $577
BANK INTEREST $2
EXPENSES
Salaries $3,929
Marketing $37,185
General Operating $72,137
Professional Fees $52,751
EXPENSES $166,002
BANK INTEREST $6,013
DEPRECIATION $9,503
NET -$180,940
MEDIFY SOLUTIONS LIMTED
UK BALANCE SHEET
$USD
01/01/2006 to 06/03/06
DEPRECIATING FIXED ASSETS $82,893
CURRENT ASSETS - DEBITORS $625,367
CURRENT LIABILITIES $723,232
MEDIFY SOLUTIONS US LIMITED $1,110,000
NET CURRENT POSITION -$1,124,972
NOTES TO FINANCIAL STATEMENTS –
FOR 3 MONTHS ENDING 30th June 2006
Nature of Business
Medify Solutions Ltd was incorporated in the State of Delaware on September 20, 2004
and originally known as Blog8, Inc. In December 2, 2004 the company’s name was
changed to Securiteyes International Inc. On February 11, 2005 the company name
was further changed to Medify Solutions Ltd in preparation for the 100% acquisition of
Medify Solutions Ltd [UK]. This independent business was incorporated on 15th August
2003 in the UK. The company registration no. is 4868652 in the United Kingdom.
The purchase of Medify Solutions Ltd [UK] was through the issuance of restricted
shares by the USA parent. The USA parent has funded (and is continuing to fund) the
ongoing operation of the UK subsidiary with loans using cash raised from the issuance
of stock under Rule 504.
Medify Solutions Ltd [UK] is the sole operating company of Medify Solutions Ltd [USA]
and has registered offices at 8 Jury Street, Warwick, CV34 4EW, UK.
The nature of the business is to supply patient note remote access technology and
e-learning technology to the health care market in the UK. Over 90% of this market is
state run by the UK National Health Service (NHS), a government body that in
2004-2005 has a £GBP 69 Billion spending budget. However, progress has been slower
than predicted, in some part due to the bureaucratic decision-making processes of the
NHS and also due the delays created by a re-structuring. The Directors are still
confident that revenues will start later in 2006 but, in view of the delay, have adopted a
policy of reducing costs stringently until the revenue streams become clearer.
The Company has identified further potential revenue streams from operations in other
countries with comparable health systems and that the first potential markets are in Italy
and Spain. The Company has announced an Agreement to license the Medify Remote
system for development in the Italian and Spanish market has been signed and it is
predicted that this Agreement will generate significant revenue in 2006.
This report should be read in conjunction with the Investor Update
Basis of Accounting
The Directors are in the process of completing the completion of the formal audit and
consolidation of the figures with the US holding company for the year ending 31st
December 2005.
It should be noted that there are no US based employees etc and the Company is not
trading in the US at the present. The only revenue is that generated by the issuance of
stock and the only costs are those associated with the fund raising and the statutory
reporting etc. These costs have been paid from the UK company and will be transferred
as appropriate on consolidation.
The accompanying financial statements of Medify Solutions Ltd [UK] for the 6 months to
June 2006 have been prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles. In the opinion of management, these interim
financial statements include all adjustments necessary in order to make them not
misleading.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results could differ
from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considered all cash and
other highly liquid investments with initial maturities of three months or less to be cash
equivalents.
Net Earning (loss) per Share
This will be included once the consolidated figures have been completed
Foreign Income Taxes
Medify Solutions Ltd [UK] can confirm that all the relevant financial statements have
been filed with the UK Inland Revenue & Companies House. There are no taxes owed
to the UK government as at the 30th June 2006.
Capital Stock Transactions
This will be finalized once the consolidated figures have been completed.
Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. AS previously noted, the Company operations are still in
the development stage and the Company has, to date, generated no income other than
trial revenue.
The continuation of the Company has been significantly assisted by the agreement to
equity funding by Mazuma Funding Corporation which could total nearly $1m if the cash
flow requires this level of injection. Furthermore, the Directors continue to support the
Company with the injection of funds and deferred loans.
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
During this quarter, the Company has agreed to the issue of further equity with Mazuma
Funding Corporation of New York under Rule 504. Further tranches have been drawn
down during the Quarter as outlined below.
The company has issued 2 tranches in May and June 2006 as follows:
Type of
Security
Type of
Offering
Jurisdiction
where
Registered or
Qualified
Number of
Shares
Offered
Price
Number of
Shares Sold
Common
Shares
Rule 504 New York 1,878,787
$0.03/
share
1,878,787
Common
Shares
Rule 504 New York 1,454,545
$0.0275/
share
1,454,545
The Directors are confident that, once the final cancellation is effected, the auditors will
confirm that the share transactions shown below are correct.
Medify Solutions Limited
Stockholders Equity
(Unaudited)
Common Stock
Shares Amount
Restricted shares 29,300,000 $ 2,700
504 Offering (12.06.04) 2,000,000 $10,000
Balance as at 12.31.04 31,300,000 $12,700
Cancellation of Restricted Stock -29,300,000 ($2,700)
504 Offering (02.08.05) 2,000,000 $10,000
504 Offering (03.02.06) 2,800,000 $14,000
Issue Rest Shares to Management
for MSL (UK) acquisition (02.22.05) 13,200,000 $182
Total Shares as 03.10.05 20,000,000 $34,182
Forward split (4 for 1) (03.11.05) 80,000,000 $34,182
Issue Ord shares for Medify 10,000,000 $182
Limited acquisition (18.11.05)
504 Offering (11.30.05) 2,488,235 $50,000
504 Offering (12.21.05) 714,285 $50,000
Balance as at 12.31.05 93,202,520 $134,364
504 Offering (02.16.06) 2,000,000 $10,000
504 Offering (02.23.06) 600,000 $50,000
Reinstated 3,486,000
Balance as at 03.31.06 99,288,520 $194,364
504 Offering (05.29.06) 1,878,787 $50,000
504 Offering (06.28.06) 1,454,545 $40,000
Balance as at 06.30.06 102,621,852 $284,364
CERTIFICATION
I, Jonathan Bryant, hereby certify that these financial statements and accompanying
notes present fairly, in all material respects, the financial position of Medify Solutions Ltd
[UK] and the results of its operations and cash flows for the periods presented, in
conformity with accounting principles generally accepted in the UK.
Jonathan Bryant
Executive Chairman
Medify Solutions Ltd
Ends.
Issued by the Medify Solutions Limited Press Office.
This press release contains "forward-looking" statements within the meaning of Section 21A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934 as amended, and is subject to the safe harbors created thereby.
Such statements involve certain risks and uncertainties associated with an emerging company. Actual results could differ materially
from those projected in the forward-looking statements as a result of risk factors discussed in Medify Solutions Inc. reports that will
be on file with the US Securities and Exchange Commission.
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