Interim Report and Financial Statements

Transcription

1 Interim Report and Financial Statements Fourth Quarter 2013 CORPORATE OFFICE Product Development Commercial Office Commercial Office Thin Film Electronics ASA & Production NFC Innovation Center Thin Film Electronics KK Henrik Ibsens gate 100 Thin Film Electronics AB 2865 Zanker Rd. Cerulean Tower 15F PO Box 2911 Solli Westmansgatan 27B San Jose, CA Sakuragaoka-cho 0230 Oslo Norway Phone Linköping Sweden Phone USA Phone Shibuya-ku Tokyo Japan Phone

2 Highlights Contents Highlights 2 Business Review 3 Shows and Events 5 Financial Report 6 Principal Risks 7 Outlook 7 Consolidated Statements 8 Notes 11 Thinfilm achieved revenue of NOK 11.5 million (USD 1.9 million) in 2013, more than 135% revenue growth year over year from 2012 Invesco Perpetual Funds invested NOK 280 million (USD 47 million) in Thinfilm Thinfilm delivered commercial order of Brand Protection Labels to customer in luxury goods market Brady Corporation and Thinfilm entered strategic alliance to bring electronic Smart Labels to healthcare and identification markets The Bemis Company and Thinfilm extended commercial agreement in flexible packaging Thinfilm demonstrated the first stand-alone printed electronic label for its Smart Label product line Contact John Afzelius-Jenevall Chief Financial Officer Mob jaj@thinfilm.no Thinfilm s first internal, high-volume roll-to-roll printer passed factory acceptance tests and was received for installation at Thinfilm development site in Linköping, Sweden Following the close of the quarter, Thinfilm acquired leading printed NFC technology, originally developed by Kovio Inc

3 Business Review In early Q4 2013, Invesco Perpetual Funds invested NOK 280 million (USD 47 million) in two tranches, bringing Thinfilm to a fully funded case for its first two generations of products Thinfilm Memory and stand-alone Thinfilm Smart Labels. Thinfilm delivered Thinfilm Brand Protection Labels to its first customer in luxury goods. The Company entered a strategic alliance with Brady Corporation and extended its collaboration with the Bemis Company. Both partner companies anticipate these programs to be the first of multiple applications for Thinfilm Smart Labels in their respective markets. Thinfilm demonstrated the world s first stand-alone printed electronic label, a temperaturemonitoring Smart Label for perishable goods, and began installation of its first internal high-volume, roll-to-roll printer. Invesco Invested USD 47 Million In October 2013, funds managed by Invesco Asset Management Limited acquired 56,000,000 shares in Thinfilm at a subscription price of NOK 2.50 per share, totaling USD 23 million. In addition, Invesco Funds received 46,666,666 warrants, each with an exercise price of NOK At a Board meeting held after the close of trading on 30 October 2013, the Thinfilm Board of Directors approved a request by Invesco to exercise the warrants in advance of the expiration of the original 12-month lock-up period, taking the total Invesco investment in Thinfilm to USD 47 million. Since the Invesco investment, and subsequent acceleration of Thinfilm s NFC roadmap, the Company has seen significant international interest from both the financial community and industry. This level of investment by a blue-chip investor should give current and potential shareholders confidence in the strength of the business model. Edison Investment Research Ltd. First Delivery to Luxury Goods Market In December 2013, Thinfilm made the first delivery of Brand Protection Labels based on Thinfilm Memory to an international luxury goods company. The labels were received at the customer s factory in China in December and release of products using the Thinfilm Brand Protection Solution is expected in Q The Brand Protection Solution will both provide product authentication and assist in tracing grey market activity. The Brand Protection Labels were produced at Thinfilm s production partner, InkTec, in South Korea. Similar brand protection applications are being pursued by the Bemis Company for integrated use in flexible packaging. Strategic Alliance Formed with Brady Corporation Thinfilm entered a strategic alliance with Brady Corporation, an international manufacturer of solutions that identify and protect premises, products, and people. Dynamic labels have the potential to be an important part of our product offerings, and we see opportunity for Thinfilm s technology in multiple market segments, explained Matt Williamson, President of Brady s Global Identification Solutions Business. Under the agreement, Brady Corporation receives exclusive rights to distribute timer labels based on Thinfilm Smart Label technology for visitor and healthcare identification applications. With Brady s large and diverse customer base, the relationship opens new markets to Thinfilm and puts Thinfilm s printed electronics technology at the forefront of the labeling industry. Brady s products include high-performance labels and signs, safety devices, printing systems and software, and precision die-cut materials. Brady has more than one million customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical, and a variety of other industries. The alliance is not limited to the timer label, and Thinfilm and Brady are in discussion of other non-exclusive applications as part of an on-going collaboration. Brady is headquartered in Wisconsin, USA, and employs more than 6,500 people at operations in the Americas, Europe, and Asia-Pacific. Brady s 2013 net sales were approximately USD 1.2 billion

4 Extended Agreement with the Bemis Company Thinfilm extended its commercial agreement with the Bemis Company to encompass both brand protection for flexible packaging and intelligent packaging solutions. Bemis secured access to additional Thinfilm technologies for brand protection applications in flexible packaging and beverage labeling. The companies thereby extended their partnership for an additional two-year period. First Demonstration of Stand-alone Smart Label In October 2013, Thinfilm demonstrated the first fully integrated, stand-alone Smart Label, a temperature-monitoring label running solely on thin-film batteries. The temperature-monitoring label will be used to enhance the safety of perishable goods, such as pharmaceuticals and food products. The demonstration included licensed technology from industry leaders PARC, Polyera, PST, and Acreo, Swedish ICT, enabling Thinfilm to bring to market a complete integrated electronic solution. Thinfilm is in discussion with leaders in the temperature-monitoring market regarding go-to-market strategies, and expects to deliver commercial samples to strategic partners and lead customers by year-end collaboration. The timer label indicates when a certain amount of time has passed by turning an electronic display on and off. The timer label and temperature-monitoring label are expected to be among the first products to market in the Thinfilm Smart Label family. Installation of First Internal High-volume, Roll-to-roll Printing System Factory acceptance tests of Thinfilm s first internal high-volume, roll-to-roll production system were passed in Q In December, Thinfilm received delivery of the system, designed and built by Kroenert GmbH, and began installation at its development site in Linköping, Sweden. In mid-february, site acceptance tests were completed. With a capacity of up to 200 million units of printed memory labels, the new system will provide a platform for process development and pilot printing of printed logic, and offers a second production site for Thinfilm Memory. Acceleration of Thinfilm NFC Roadmap Following the close of the Q4 2013, Thinfilm acquired the world s leading printed near field communication (NFC) technology, originally developed by MIT and Kovio Inc. As part of the transaction, Thinfilm acquired certain assets of Kovio Inc., including over 200 patents and manufacturing and development equipment. The Kovio NFC communication protocol has been validated by the industry and is currently supported in major mobile platforms such as Google Android and the next releases of all major NFC controllers. Adding NFC to our printed electronic memory and sensor platform will allow the seamless exchange of information between Thinfilm s Smart Labels and NFC-enabled phones and tablets, said Davor Sutija, CEO, Thinfilm. As a consequence of the transaction, Thinfilm established the Thinfilm NFC Innovation Center in San Jose, California, in the heart of Silicon Valley, More than 20 of Kovio s employees joined the NFC Innovation Center. This core team will build out the Innovation Center s competence in design, process development, and manufacturing. By the end of 2014, Thinfilm expects to integrate printed NFC with its Smart Labels, making them wireless and readable with NFC-enabled smart devices. The excitement of the teams in both San Jose and Linköping is tangible. The new site is an ideal location to recruit additional talent into Thinfilm and continue to build the Thinfilm ecosystem, both commercially and technically, said Christer Karlsson, CTO, Thinfilm. Following the signing of its strategic alliance with Brady, Thinfilm and Brady released a demonstration video of the timer label that is the basis of their initial The acquisition of Kovio technology is an astute strategic move by Thinfilm. - Raghu Das, CEO, IDTechEx

5 Shows and Events Thinfilm presented at IACC (International Anti- Counterfeiting Conference), San Francisco, USA, October Thinfilm hosted the Organic and Printed Electronics Organization (OE-A) Workshop at Linköping, Sweden, October Thinfilm presented at Printed Electronics (PE) USA in Santa Clara, USA November Thinfilm participated in Innovation Norway Tech City UK Executive Accelerator (TEA) in London, England 4-5 October and 4-5 December Thinfilm Memory Products Memory Labels: Thinfilm Memory stores digital data on a label thinner than a human hair, for just a few cents. Brand Protection Solution: The Thinfilm Brand Protection Solution is a two-part system that can help manufacturers protect their brands from counterfeiting and grey market activity. It consists of adhesive labels that generate a distinct forensic electrical signature. A Thinfilm Authentication Unit reads the label. Sensor Labels: Thinfilm is developing a line of intelligent labels that will sense information and store data for 1/10 th to 1/100 th the cost of conventional electronics. This is part of Thinfilm s vision to bring the Internet of Everything to even the lowest-cost items. Display Labels: Thinfilm Display Labels will use ultra-low-cost display media to communicate information stored in the Thinfilm Memory. Data may be written to the memory through a contact-based interface, stored wirelessly or, as on our Sensor Labels, generated by other functions on the label. NFC Smart Labels: Following the acquisition of NFC technology, Thinfilm has accelerated its plans for the launch of NFC-enabled sensor and display labels. Thinfilm s Smart Labels will initially use the Kovio NFC Barcode protocol to enable seamless data exchange from a sensor label to a smart phone. The protocol is currently supported by Google Android and all major NFC controller manufacturers. About Thinfilm Thinfilm is a publicly listed Norwegian company with its headquarters in Oslo, Norway, product development and production in Linköping, Sweden, product development, production and business development in San Jose, California, USA, and sales office in Tokyo, Japan. In addition, manufacturing is provided through a production partner in Pyongtaek, South Korea. Thinfilm is a leader in the development of Printed Electronics. The first to commercialize printed, rewritable memory, the Company is creating printed systems that include memory, sensing, display, and wireless communication, all at a low cost unmatched by any other electronic technology. Thinfilm s roadmap integrates technology from a strong and growing ecosystem of partners. Our goal is to enable the Internet of Everything by bringing intelligence to disposable goods. Printing electronics uses far fewer process steps than traditional semiconductor fabrication. This reduces manufacturing costs and lessens the environmental impact of manufacturing electronic memory and logic. Thinfilm s memory, paired with the logic being developed in conjunction with PARC, a Xerox company, is bringing low-cost electronics to the trillions of disposable products and items that we use every day. Low-cost, ubiquitous Smart Labels will store and communicate information, a vital part of the Internet of Everything. This is our Memory Everywhere vision

6 Condensed Consolidated Financial Report as of 2013 Thinfilm s revenue in the fiscal year of 2013 amounted to NOK 11.5 million, an increase of NOK 6.7 million, or 137%, compared to 2012 (2012: NOK 4.9 million). Sales revenue amounted to NOK 5.3 million in the four quarters of 2013 (compared to NOK 1.9 million for the same period in 2012), and was largely related to technology access fees, product development projects, and delivery of prototypes to strategic customers and partners. Revenue related to government grants and other funded projects amounted to NOK 6.2 million in 2013 (2012: NOK 2.9 million). NOK 1.1 million related to one of the grants were recognized in 2012 as a cost reduction. In 2013, the same grant and amount was recognized as revenue. The 2012 figures have been adjusted retrospectively for this change in accounting policy. Revenue in the fourth quarter of 2013 amounted to NOK 5.3 million, an increase of NOK 2.0 million, compared to the corresponding quarter last year. Operating costs (excluding depreciation and impairment charge) amounted to NOK 93.2 million in 2013, including the cost of share-based compensation of NOK 18.3 million. The corresponding figures for 2012 were NOK 51.1 million and NOK 5.6 million, respectively. The operating costs for the fourth quarter of 2013 and 2012 were NOK 38.2 million and NOK 14.1 million, respectively. The significant increase in cost of share-based compensation in 2013 is explained by the strong increase in the THIN share price during the second half of 2013 and the resulting increase in value of the outstanding Employee Subscription Rights. NOK 13.1 million of the NOK 18.3 million cost relates to Social Security tax that is payable at some future time upon exercise of Subscription Rights. The cash Social Security tax due to exercise of Employee Subscription Rights in 2013 was NOK 0.8 million. Excluding share-based compensation and other non-cash costs, the underlying cash cost increase was some NOK 22 million, compared to The main drivers behind this increase are higher payroll and laboratory costs (NOK 10 million and NOK 6 million higher than the same period in 2013, respectively), as activities in the Linköping facility were ramped up. At the end of 2013, there were 40 full-time employees in the group (compared to 23 full-time employees at the end of 2012). In addition, Thinfilm has expanded its laboratory facilities during 2013, including commissioning of a 1,000 m² class 100 printing facility. Investments amounted to NOK 17.8 million in 2013, an increase of NOK 15.9 million, compared to 2012 (2012: NOK 1.9 million), largely related to provisioning of high-definition gravure printing machines and in particular the new roll-to-roll printing line in Linköping. The investments in the fourth quarter amounted to NOK 11.4 million, compared to NOK 1.3 million for the same period in Depreciation in 2013 amounted to NOK 1.6 million (2012: NOK 0.5 million). Net financial items in 2013 amounted to a gain of NOK 1.7 million (2012: NOK 0.3 million), mainly related to interest income on cash deposits and variations in SEK and USD. The company operates at a loss and there is a tax loss carry forward position also in the Swedish subsidiary, such that the group has not incurred any tax costs in 2013 or the prior year. The company has not recognized these deferred tax assets in its balance sheet, because this potential asset does not yet qualify for inclusion. The net result in 2013 was a loss of NOK 81.6 million, corresponding to a loss of NOK 0.21 per basic share. In 2012, the loss amounted to NOK 46.4 million, corresponding to a loss of NOK 0.14 per basic share. The group s cash balance increased by NOK million in 2013 (compared to an increase of NOK 25.5 million in 2012). The increase in cash balance is explained by three principal elements: An outflow of NOK 48.1 million from operating activities, a NOK 13.7 million outflow from investing activities, and a NOK million inflow from financing activities, primarily from the Invesco investment in the fourth quarter of The cash balance on 2013 amounted to NOK million, while cash net of receivables and payables amounted to NOK million (including share-based liability of NOK 15.9 million, i.e., provisions for Social Security tax expense associated with exercise of subscription rights). The cash balance on 2012 amounted to NOK 32.9 million, while cash net of receivables and payables amounted to NOK 27.4 million (including share-based liability of NOK 2.6 million). The Company s balance sheet comprises essentially cash, receivables, payables and accruals, and net equity. The intangible property rights in the form of patents and know-how have not yet been capitalized

7 Principal Risks It is the duty of the Board to present the principal risks of Thinfilm and its business. Thinfilm does not have any significant assets or liabilities with risk. Thinfilm does not own financial instruments, financial assets, or liabilities, and has limited financial risks related to currency and interest rates. The Company s predominant risks are market and business risks, summarized in the following points: (1) Many of Thinfilm s intended markets are still immature, (2) to some extent, Thinfilm is dependent on continued collaboration with existing technology, material, and manufacturing partners, and (3) product development risks related to eventual cost vs. functionality competitiveness of the products Thinfilm is currently developing. Going forward, Thinfilm foresees two important revenue sources: (1) sales of its own manufactured products and (2) licensing/royalty revenue, where partners and customers pay for the right to use the Company s intellectual property rights (IPR). Thinfilm s ability to earn revenue partly depends on continued successful technology and product development as well as the Company s ability to legally protect its IPR. This is, in turn, dependent on the Company s ability to attract and retain competent staff and the adequacy of Thinfilm s patenting and other IPR-protection activities. The going concern assumption has been applied when preparing this preliminary financial report. The Board has formed a judgment that, as of the date of approving the financial statements, the Company has adequate resources to fund operations for the foreseeable future. At 2013, the equity amounted to NOK 258 million, representing 88% of the gross balance sheet and 498% of the share capital. Outlook Thinfilm concentrates its efforts around three main areas: 1) commercializing memory products, including Brand Protection, 2) developing and commercializing wireless, integrated systems and Smart Labels, and 3) building an ecosystem of partners and alliances to complement the Company s own technology, and to license this technology to customers. Thinfilm has a unique and cost-competitive stand-alone memory product and Brand Protection Solution, and will continue to work toward large-scale commercialization of these products. The investment level may increase from current levels, as the Company may enter into joint venture structures with scale-up partners. In addition, Thinfilm will work toward commercialization of the integrated systems such as the Display Label and Sensor Label for disposable goods, healthcare, packaging, and more. Thinfilm has established partnerships for display, sensor, and battery technology, and demonstrated the first prototype of a printed temperature-sensor label with battery in early October Commercialization of first-generation integrated systems is expected in The integration of near field communication (NFC) into Thinfilm s printed integrated systems is expected to offer additional growth opportunities. Applications for consumer mass markets will likely include brand protection, logistics, healthcare, and smart packaging. Successful demonstrations of prototypes and products are expected to attract significant interest from prospective customers and partners, as well as from established companies offering competing products based on conventional technologies. In January 2014, Thinfilm acquired technology, intellectual property, and manufacturing assets from Kovio Inc. The acquisition provides Thinfilm with in-house NFC technology. Thinfilm expects to accelerate its wireless roadmap with demonstrations of NFC-enabled systems in Thinfilm continues to see significant interest in the Company and its technology, and is in ongoing discussions with both existing and new parties. Both the Board and management are very optimistic that Thinfilm will be able to enter new commercial and strategic relationships in the near future for the development and commercialization of printed integrated systems and Smart Labels. Oslo, Norway, 27 February 2014 The Board of Directors of Thin Film Electronics ASA - 7 -

8 Thin Film Electronics ASA Group Condensed consolidated interim financial statements as of 2013 (Unaudited) Consolidated statements of comprehensive income Amounts in NOK 1000 Note 1 October October Sales revenue Other operating revenue Total revenue Operating costs 8 (38 178) (14 073) (93 176) (51 091) Depreciation and impairment charge 3 (606) (215) (1 630) (507) Operating profit (loss) (33 515) (10 978) (83 266) (46 725) Net financial items Profit (loss) before income tax (32 613) (10 877) (81 601) (46 405) Income tax expense Profit (loss) for the period (32 613) (10 877) (81 601) (46 405) Profit (loss) per share basic and diluted 5 (NOK 0.07) (NOK 0.03) (NOK 0.21) (NOK 0.14) Profit (loss) for the period (32 613) (10 877) (81 601) (46 405) Currency translation 71 (68) 244 (37) Total comprehensive income for the period, net of tax (32 542) (10 945) (81 357) (46 442) Consolidated statements of financial position Amounts in NOK 1000 Note ASSETS 6 Non-current assets Property, plant, and equipment Current assets Trade and other receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Ordinary shares Other paid-in equity Currency translation Retained earnings ( ) ( ) Total equity Liabilities 6 Trade and other payables Total liabilities TOTAL EQUITY AND LIABILITIES

9 Consolidated statements of changes in equity Amounts in NOK 1000 Note Share capital Other paid-in equity Currency translation Retained earnings Total Balance on 1 January ( ) Warrants exercise March Share issue 8 May, board remuneration Share-based compensation Share issue employees Share issue 02 October Invesco Share issue 29 October PARC Share issue 30 October Invesco Share issue 20 December PARC Comprehensive income 244 (81 601) (81 357) Balance on ( ) Balance on 1 January (79 934) Share issue to employees 28 February Private placement 12 March Share issue 10 May, board remuneration 9 9 Share issue 20 September, PARC Warrants B exercise 1-12 October Share issue to employees 8 November Share-based compensation Comprehensive income (37) (46 405) (46 442) Balance on ( )

10 Consolidated cash flow statements Amounts in NOK 1000 Note CASH FLOW FROM OPERATING ACTIVITIES 1 October October - 30 December Operating profit (loss) (33 515) (10 978) (83 266) (46 725) Share-based payment Depreciation and impairment Changes in working capital and non-cash items Net cash from (used) on operating activities (5 769) (7 547) (48 082) (39 450) CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant, and equipment 3 (9 058) (1 240) (15 147) (1 924) Interest received Net cash from (used) on investing activities (7 928) (1 094) (13 701) (1 455) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of shares (23 098) Net cash from (used) on financing activities (23 098) Currency translation effects on cash and bank deposits 21 (12) 198 (11) Net increase (decrease) in cash and bank deposits Cash and bank deposits at the beginning of the period CASH AND BANK DEPOSITS AT THE END OF THE PERIOD The notes on the following pages are an integral part of this condensed interim financial report

11 Notes to the Consolidated Financial Statements Note 1 - Information about the group Thin Film Electronics ASA ( Thinfilm or the Company ) was founded on 22 December Thin Film Electronics ASA Group ( Thinfilm ) consists of the parent company Thinfilm ASA and the subsidiaries Thin Film Electronics AB (Thinfilm AB ), Thin Film Electronics Inc. ( Thinfilm Inc. ) and Thin Film Electronics KK ( Thinfilm KK ). The group was formed on 15 February 2006, when Thinfilm ASA purchased the business and assets, including the subsidiary Thinfilm AB, from Thin Film OldCo AS ( OldCo ). Thinfilm Inc. was incorporated in the US during April 2011, and similarly, Thinfilm KK was incorporated in Japan during January The accounting year corresponds to the calendar year. Thinfilm AB is held 100% and has been consolidated since 15 February Thinfilm Inc. is held 100% and has been consolidated since 1 May Thinfilm KK is held 100% and has been consolidated since 1 February The purpose of Thinfilm ASA is research, development, production, and commercialization of technology and products of physical storage of information, as well as related activities including participation in other companies. The Company is a public limited-liability company incorporated and domiciled in Norway. The address of its registered office is Henrik Ibsens gate 100, Oslo, Norway. The Company s shares were admitted to listing at the Oslo Axess on 30 January Note 2 - Basis of preparation, accounting policies, and resolutions This condensed interim financial report for the four quarters of 2013 has been prepared in accordance with IAS 34 interim financial reporting. The condensed consolidated interim financial report should be read in conjunction with the consolidated annual financial statements for The IFRS accounting policies applied in this condensed consolidated preliminary financial report are consistent with those applied and described in the consolidated annual financial statements for The going concern assumption has been applied when preparing this preliminary financial report. The Board has formed a judgment that, as of the date of approving the financial statements, the Company has adequate resources to fund operations for the foreseeable future. On 6 September 2013 it was announced that funds managed by Invesco Asset Management Limited had agreed to acquire 56,000,000 shares in the Company at a subscription price of NOK 2.50 per share totalling NOK 140,000,000 (USD 23 million) equal to 13% of the shares in Thinfilm. At the 2 October 2013 Extraordinary General Meeting of Thinfilm, it was resolved to issue said shares, and upon subscription in the offering, Invesco also received 46,666,666 warrants, each with an exercise price of NOK On 30 October 2013, the Board of Directors of Thinfilm resolved to accept Invesco s exercise of said warrants implying another NOK 140,000,000 (USD 24 million) of capital for the Company. This consolidated interim financial report has not been subject to audit. The report was resolved by the Board of Directors on 27 February Note 3 - Property, plant, and equipment Amounts in NOK 1000 Year ended 2013 Tangible assets Net book value on 1 January Additions Disposals Depreciation, impairment, and other movements - (1 630) Net book value on Year ended 2012 Net book value on 1 January Additions Disposals - Depreciation, impairment, and other movements (530) Net book value on

12 Note 4 - Shares, warrants and subscription rights Number of shares Number of shares Shares at 1 January Warrants exercise March Share issue 8 May board remuneration Share issue 15 August employees Share issue 27 August employees Share issue 23 September employees Share issue 2 October Invesco Share issue 29 October PARC Share issue 29 October employees Warrants exercise 30 October, Invesco Share issue 7 November employees Share issue 20 December PARC Shares at Shares on 1 January Share issue to employees 28 February Private placement 12 March Share issue 10 May, board remuneration Share issue 20 September, PARC Warrants B exercise 1-12 October Share issue to employees 8 November Shares on Number of warrants and subscription rights Warrants and subscription rights opening balance Grant of incentive subscription rights Terminated, forfeited, and expired subscription rights ( ) ( ) Exercise of subscription rights ( ) ( ) Allotment of warrants Exercise and expiry of warrants ( ) ( ) Warrants and subscription rights closing balance

13 Note 5 - Profit (loss) per share Profit (loss) attributable to shareholders (NOK 1000) (81 601) (46 405) Weighted average basic number of shares in issue Weighted average diluted number of shares Profit (loss) per share, basic and diluted (NOK 0.21) (NOK 0.14) When the period result is a loss, the loss per diluted number of shares shall not be reduced by the higher diluted number of shares, but the diluted result per share equals the result per basic number of shares. The diluted number of shares has been calculated by the treasury stock method. If the adjusted exercise price of subscription rights exceeds the average share price in the period, the subscription rights are not counted as being dilutive. Note 6 - Contingent assets and liabilities Thinfilm does not have any contingent assets or liabilities. Thinfilm has not issued any guarantees. However, as a part of assuming manufacturing assets of Kovio Inc., as mentioned in Note 9 below, Thinfilm in January 2014 issued a USD 600,000 Letter of Credit to the landlord of the Thinfilm NFC Innovation Centre. Note 7 - Trade and other receivables On 2013, Trade and other receivables amounted to NOK 8.0 million. The main components of this balance are accounts receivables (NOK 5.2 million), VAT-related receivables NOK 1.8 million, and pre-payments to suppliers of NOK 0.5 million. Note 8 - Related party transactions In the period 2013, Thinfilm has recorded NOK 2.4 million (net of VAT) for legal services provided by law firm Ræder, in which Thinfilm s chairman is a partner. NOK 1.1 million relates to counseling, including prospectus work, in conjunction with the Invesco investment. In the same period the Company has recorded NOK 1.9 million (net of VAT) for services provided by Robert N. Keith, a shareholder of Thinfilm, related to a service agreement under which he assists Thinfilm in strategic analysis and in dealing with larger, international, prospective partners. Note 9 - Events occurring after the balance sheet date On 21 January 2014, Thinfilm entered into an agreement to acquire assets and intellectual property rights from Kovio Inc. The purchase price amounted to USD 2.7 million in cash and USD 1.0 million in shares, both of which have been settled in full. This transaction is accounted for as a Business Combination in accordance with the principles in IFRS