AMP.L Regulatory News (AMP)

Amphion Innovations plc

Preliminary Results for the year to 31 December 2011

Amphion Innovations plc and its subsidiaries (LSE: AMP) ("Amphion" or "the Group") today announces its preliminary results for the year ended 31 December 2011.

Highlights

·; Net Asset Value ("NAV") per Share was £0.13 as at 31 December 2011 (2010: £0.14). In dollars, NAV per Share was US $0.20 as at 31 December 2011 (2010: $0.22)

·; Despite the shortage of capital and the poor economic climate, most of the Partner Companies saw progress over the last 18 months

Ø Kromek raised £3.4 million and has been able to address the need for nuclearcontamination detectors in Japan by introducing four new products into their product lineup

Ø Motif has reached agreement in principle and is in final stage discussions to form keypartnerships with two leading Indian drug discovery and development companies

Ø FireStar advanced the development of its innovative messaging platform

Ø Axcess was issued a favorable Markman* ruling in its IP infringement lawsuit against Savi Technology, Inc.

·; Significant progress in DataTern's IP licensing programme

Ø McCarter & English added to defend cases in New York and assist with new cases against other infringers in Massachusetts

Ø DataTern's 402 patent was reissued after re-examination by the USPTO with all 20 original claims intact and 3 additional added

Ø In ongoing Texas cases 11 new licenses concluded in 2011 bringing the total to 38through December 2011

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

"Although the general environment in 2011 proved every bit as challenging as expected, Amphion made progress on a number of fronts. After a thorough review of our IP licensing programme, with the help of several outside experts in the first half, we were pleased to add McCarter & English as our principal legal partner in July 2011. Under their guidance, the successful re-examination of the second of our two patents led to its reissuance early this year. Both the 402 and 502 patents have now completed the re-examination process and have been re-issued with added claims. Amphion and our partners are making substantial additional investments in the licensing programme and we continue to have confidence in the validity of the patents and wide scope of infringement in many industries. Our seven Partner Companies are again making slow but steady progress and we were particularly pleased when Axcess received a very good Markman ruling after two years of intense and expensive litigation, which has been partly funded with capital commitments tied directly to that litigation programme.

While the general economic headwinds are not expected to ease up soon, we continue to believe we can find ways to build and extract value from DataTern and our Partner Companies and this value creation should become more visible to our shareholders over the next twelve to eighteen months".

* A "Markman" hearing is a pretrial hearing in a U.S. District Court during which a judge examines evidence from all parties on the appropriate meanings of relevant key words used in a patent claim, when patent infringement is alleged. Holding a Markman hearing in patent infringement cases has been common practice since the case of Markman v. Westview Instruments, Inc. It was determined the language of a patent is a matter of law for a judge to decide, not a matter of fact for a jury to decide. Markman hearings are important, since the court determines patent infringement cases by the interpretation of claims.

For more information:

Amphion Innovations

Charlie Morgan +1 212 210 6224

Cardew Group

Tim Robertson +44 (0)20 7930 0777

Seymour Pierce Limited

Mark Percy/ Freddy Crossley +44 (0)20 7107 8000

Chairman and CEO's Statement

As expected, 2011 proved to be another challenging year for Amphion and our Partner Companies. Revenue for 2011 as a whole fell by 15% from US $4,090,071 to US $3,463,527. Administrative expenses were sharply lower during the year, partly due to a non-cash reversal of charges for option grants, resulting in an operating profit for the year of $584,455 compared to an operating loss of $1,914,001 in 2010. Operating cash flow was negative in 2011, as it was in 2010 and the business was financed by additional loans contributed by board members during the year in the amount of US $3 million.

For the third full year since the onset of the financial crisis in 2008, the environment for raising capital directly into our Partner Companies remained negative. Including contributions from Amphion, a total of US $5.9 million was raised directly by the seven companies, with most of this (US $5.3 million) being raised by Kromek. During the course of 2011, Amphion contributed US $1 million to the Partner Companies mainly in the form of various convertible loans.

Our reported Net Asset Value ("NAV") per Share was £0.13 (US $0.20) as at 31 December 2011 compared to £0.14 (US $0.22) at 31 December 2010. Many of the Partner Companies have been unable to raise new capital in an outside financing event for the better part of three years. As a result, last year the Board decided to use a different approach to valuation in the case of these companies. Amphion continues to follow the International Private Equity and Venture Capital Guidelines but in those instances where the length of time makes the application of the last round of financing inappropriate, the equity valuations are now based on management's estimate of value. In most cases, Amphion's individual holdings in the Partner Companies consist of both convertible debt and equity, which have been valued separately. Following the reduction in value of the equity holdings in many cases, the convertible debt comprised 44.4% of total investments at 31 December 2011 (41.7% at 31 December 2010). Despite the shortage of capital and the poor economic and financial environment, most of our Partner Companies have seen some progress in the last eighteen months. We believe that some recovery should be seen and that further progress will be made if and when the companies are able to get access to additional capital.

Amphion's holding of intellectual property assets continue to be valued at amortised cost, which is now about US $921,700. The directors believe that the realizable value of the intellectual property assets held by DataTern is substantially in excess of the carrying value and the incremental investments being made in the pursuit of infringers of the IP will generate a substantial profit.

Intellectual Property Licensing Programme

In the second quarter of 2011 we undertook a thorough strategic review of Amphion's IP licensing programme. With the help of McCarter & English LLP ("McCarter"), our new legal partners, we engaged external economic and technical experts to review the strength of the programme and potential level of infringement. At about the same time, in April 2011, Microsoft and SAP filed for a declaratory judgment in New York. In addition to agreeing to support us in the pursuit of other infringers of our IP, McCarter agreed to defend us in these two suits. A key part of our new strategy was to seek a re-examination of the 402 patent and we filed for this with the United States Patent and Trademark Office ("USPTO") in the fall of 2011 with the expectation that the process might take six months or more. We were pleased that the USPTO allowed the re-issuance of 402 earlier than we had expected. The patent was reissued not only with all original 20 claims intact, but with 3 additional claims added. We now have had both our key patents re-examined by the USPTO and each has been re-issued with all original claims intact and new ones added. All patents issued by the USPTO enjoy presumption of validity and those that have been successfully re-examined rest on an even stronger foundation of validity.

In the fourth quarter of 2011, we filed new suits in Massachusetts against MicroStrategy and several of their customers who we believe infringe our IP. The suits in New York will go to a Markman hearing in late July 2012 and a court date has been set for 10 December 2012. In parallel with our work with McCarter in New York and Massachusetts, we have continued to prosecute the cases we filed in Texas in 2009 and 2010 against a number of companies we believe are infringing our technology. During the course of 2011 we concluded 11 settlements with some of those defendants and at the end of the year there were 14 defendants remaining in the three suits that were still active at that time. The settlements we reached in 2011 brought the total number concluded to 38 since the first agreement was signed in June 2008.

Our confidence in the fundamental strength of the ObjectSpark technology and IP remains strong and our capabilities in this area continue to improve. Like much of the IP underlying our Partner Companies, we believe the ObjectSpark 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 large number of additional potential licensees and that we should be able to generate a significant amount of additional 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 Software, Inc. (where the technology and patents were originally developed), so FireStar should then benefit directly as well.

We continue to look for new ways to extract additional value from the ObjectSpark technology assets and to apply our knowledge and resources to other similar programmes that emanate either from our Partner Companies or elsewhere. A case in point is the suit filed by Axcess against Savi (a subsidiary of Lockheed Martin) in May 2010. In that case the programme remained inside our Partner Company but we were active in supporting both Axcess and its litigation programme, including assisting in the arrangement of litigation financing by third parties. The Axcess case against Savi recently went before the court for a Markman* ruling which was issued by the court in April and which we believe was a favorable outcome for the company. The case is due to be heard in front of a jury on 5 November 2012.

Extracting Value for Shareholders

Since flotation, our basic business model has been to start and build high potential companies based on innovative and proprietary, but basically proven, technology. 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. However, our primary goal in every company is the development of successful business models and operating capabilities that can utilise the technology to provide innovative products and generate revenue and make profits. The bad economic climate demands continued attention to the evolution of these business models so they can be adapted to a different and generally harsher market environment.

While we cannot predict with any certainty whether, and if so how and when, the capital markets for emerging growth technology companies will revive, we have adjusted our model and our span of activities to the extent possible to continue to move forward in this difficult environment. Although the pace of advance remains frustratingly slow, most of our Partner Companies are making progress. Credit for their ability to adjust and advance must go to each of the teams who have dealt with such difficult circumstances with fortitude and adaptability.

Kromek raised £3.4 million (US $5.3 million) during the year. The nuclear contamination disaster in Japan has generated a need for new and more versatile gamma ray monitoring devices and Kromek has been able to address this need with its current range of product and is currently developing others. Our other six Partner Companies have each adapted in different ways and are evolving new strategies tailored to the new economic environment. In the case of Motif, the company has agreed in principle and is in final stage discussions to form key partnerships with two leading Indian drug discovery and development companies. FireStar has advanced the development of its innovative messaging platform and is in the process of putting into Open Source the product called MDMI which was developed for the Object Management Group and its corporate members. WellGen has recently announced the appointment of a new CEO who has been working closely with us to restart WellGen's programmes and get them moving forward again. We continue to see a lot of opportunity to build and, in due course, extract value from each one of our Partner Companies, in addition to the IP licensing programme being pursued directly by DataTern.

Prospects for 2012 and Beyond

We remain cautious and believe that conditions will improve slowly as we move through 2012 and into 2013. Capital for early stage emerging technology companies remains very scarce, as it was in 2011 and the preceding two years. The return of a viable IPO market would be a welcome development but despite some very high profile listings by some social media companies, the broader IPO market remains subdued. This may continue for a while and we are increasingly focused on finding other paths to extract value for our shareholders. We believe there is significant inherent value to be developed and extracted from DataTern and our Partner Companies and we have a clear focus on generating and returning value to our shareholders from our current assets over the next eighteen months.

R. James Macaleer

Chairman

Richard C.E. Morgan

Chief Executive Officer

*A "Markman" hearing is a pretrial hearing in a U.S. District Court during which a judge examines evidence from all parties on the appropriate meanings of relevant key words used in a patent claim, when patent infringement is alleged. Holding a Markman hearing in patent infringement cases has been common practice since the case of Markman v. Westview Instruments, Inc. It was determined the language of a patent is a matter of law for a judge to decide, not a matter of fact for a jury to decide. Markman hearings are important, since the court determines patent infringement cases by the interpretation of claims.

Partner Company Summaries

Axcess International (OTCBB: AXSI) provides intelligent Wireless IDs for business encompassing local location identification, tracking, and control capabilities using its patented MicroWireless™ technology platform. MicroWireless, based on active RFID principles, forms the economic and technological sweet spot for automated, autonomously-powered low cost, miniature, wireless devices. Axcess has a portfolio of patents, of which 11 have issued to date and two are still in prosecution with the United States Patent and Trademark Office. In May 2010, Axcess filed a lawsuit in Dallas, Texas against Savi Technology, Inc., a wholly-owned subsidiary of Lockheed Martin Corporation, alleging infringement of U.S. Patent Nos. 6,294,953 entitled "High Sensitivity Demodulator For A Radio Tag And Method", and 7,271,727 entitled "Dual Frequency Radio Tag For A Radio Frequency Identification System". In April 2012, Axcess was issued the ruling in the Markman hearing with the trial set for 5 November 2013. In March 2012, Axcess entered into a credit agreement with RFID LLC. The credit facility totaled US $1.48 million and under circumstances related primarily to the intellectual property litigation activities, a total of US $10 million could be made available.

FireStar Software builds software that empowers application-to-application electronic message exchange between corporate and other entities. FireStar's EdgeNode messaging platform and MDMI data translation technologies empower companies to exchange electronic messages without detailed technical knowledge of other exchange members. They are the only solutions that provide a cost-point that is low enough to bring Small and Medium Businesses into comprehensive data exchanges. FireStar's products constitute the ability to bring comprehensive B2B capacity to industries that are currently dependent on fax, telephone, and paper mail. While these technologies can be applied to any vertical industry, FireStar is concentrating on the US Healthcare market where there are 1 million+ unaffiliated providers who require such comprehensive data exchange abilities. FireStar also has a net profit interest in the results of DataTern's IP licensing programme, which will run at approximately 36% once Amphion has recovered the cumulative expense in the programme. In addition, FireStar has an equity holding of 36% in PrivateMarkets.

Kromek is a multi-award winning company producing systems and sub-systems that are revolutionising digital x-ray and gamma radiation detection in four large and growing global markets: security, medical, industrial inspection, and defence. A pioneer of digital colour imaging for x-rays, Kromek combines ground-breaking materials innovation with advanced imaging. Kromek currently markets a range of products across multiple markets including: medical and pre-clinical CT, nuclear detection in defense and the civil nuclear market, and explosives detection within the aviation security market. Significant growth in the radiation detection market during 2011/2012 has enabled the company to introduce, and generate commercial sales for, four new products (in addition to sales of its established products: bottle scanner, GR1, ASICs and electronics): the RayMon10TM and RadPro50TM, two separate and distinct rugged handheld detector probes, linked to powerful handheld computers, for high-resolution and high-sensitivity isotope ID; the Food Inspector, a high performance monitor for detecting the presence of radioactive contaminants in solid foods and liquids; and the WallRover Radbot, a radiation detector carrying radio-controlled vehicle that delivers high resolution nuclide identification in hard-to-reach and high-risk environments. Currently, Kromek is planning a major product launch in the nuclear radiation detection market. New product development has seen a substantial number of new patents filed/granted, increasing the company's IP portfolio. Kromek has also entered into a number of new technology partnerships /distributor agreements.

Motif BioSciences is applying the expertise of a world class team of experienced drug discovery scientists in medicinal chemistry, biology, and other disciplines to develop best-in-class small molecule compounds that can be partnered out to pharmaceutical companies for further development. Motif's early projects are in therapeutic areas of major unmet medical need including rheumatoid arthritis, MRSA, over active bladder, and migraine. In each case Motif is building on first-in-class lead compounds and mechanisms which have already established proof of concept in man, significantly increasing the probability of success of the company's proprietary best-in-class compounds. Motif will be collaborating with leading partners in India who have endorsed the scientific validity of the company's research programme and provided attractive risk sharing arrangements to conduct the early discovery phase of the programme.

m2m Imaging is a leading developer of preclinical and clinical imaging system accessories. With a product portfolio that spans from 0.2T to 21T, and from 2mm to 30cm, m2m specialises in custom developments to specific research requirements. Surface coils, volume coils, arrays, and our multi element Hi B1 field uniformity BioSAW coils are all available either as standalone coils or integrated into a hi throughput "AHS" platforms with anesthesia, nosecones, and stereotactic fixation. m2m builds coil and coil systems for all manufacturers platforms, horizontal and vertical bore, all nuclei, all applications, and has over 4000 products in use in major University and Pharmaceutical labs around the world.

PrivateMarkets is at the leading edge of emerging demand for new financial marketplaces that address unique transaction requirements by using social networking approaches to create trading solutions that are compatible with the new regulatory environment. The company's focus is on the growing need for solutions in the energy markets, post-reform financial derivatives, and in many physical commodity markets. Each of these is a growing multi-billion dollar market that represents significant opportunity. Transactions in these markets need the efficient access to liquidity that PrivateMarkets will provide. PrivateMarkets provides innovative Internet-based marketplaces that link together networks of potential buyers and sellers who need to conduct customized transactions. The technology enables customers to create their own private "mini-markets" where others they invite can vie competitively for their business. PrivateMarkets replaces individual, undocumented, one-on-one voice or IM communications between trading counterparties with a hosted, easy-to-use service that facilitates closing a transaction and is accessible from any user's desktop or mobile device. 

WellGen is at the crossroads of food and pharmaceuticals, developing natural products with medicinal properties, backed by rigorous scientific research. WellGen's products are in development for applications in the management of chronic inflammation-based disease, consumer products, and pet products. Each of these opportunities represents a multi-billion dollar market. Building on the extensive foundation of R&D on the company's lead products, discussions are in progress with potential partners in the areas of pet care and consumer beverages. Pets suffer from many of the same inflammation-based conditions that affect their owners. WellGen products are currently being screened by a major pet care company to evaluate efficacy for these applications. Our clinical trial results demonstrate that WG0401 enhances muscle recovery after exercise. Sports beverages are a natural fit for this product. WellGen is in discussion with a beverage company to develop a sports beverage based on WG0401. Additional clinical trials are planned in the area of inflammation-based disease management. In May 2012, after serving on the Board of Directors for over 3 years, Dr. Laura Philips joined WellGen as CEO. She brings a breadth of experience in biotech, strategy, management, and technology to the role.