Full Year Results, December 2002

Posted: 29/04/2003

Full Year Results for the year ended 31st December 2002

Chairman’s statement

I am pleased to report on the annual results for Forbidden Technologies for the third completed year of our development. In the year to 31 December 2002 the company recorded a loss of £430,981 compared to £230,854 in the previous year. Since there were insignificant sales in both years, the increased loss is the result of higher investment in resources (mainly for business and sales development). Our balance sheet continues to be very strong with £2.7 million cash in the bank. At the present cash burn rate of £361,000 p.a. this cash represents over 7 years forward cover.

Technology

Over the past three years our proprietary technology has progressed dramatically and visibly; from our early confidence that video could be compressed sufficiently to produce results via a 56k modem on a PC to a range of products now available on PCs via narrowband or broadband, and on PDAs and (as we shall demonstrate at our results briefing today) on GPRS mobile phones with sound and colour. We have begun a development programme for live (i.e. immediate) compression capability.

The Market and Business Development

The economic and political environment over the past six months has seen a continuation of caution and risk aversion across many of our target markets. Uncertainty in business represents a barrier to innovation and investment in new technology.

However, we take a long term view of our markets and we seed development through flexible business models, even including a recent barter trade which though of value, is not recordable as sales. Despite the environment we have seen good development of interest in our ever-improving products. We are currently in active discussions with more than 30 different organisations 11 of which relate to PC delivery, 10 to mobile phone business, 5 to video production companies and 5 to others. Not all of them will come to fruition but the broad spread of activities is indicative of the growing acceptance of and interest in Forbidden Technologies products.

The separate announcement made today describing our agreement with Cantos represents a significant opportunity to increase exposure of our products to a wide range of blue-chip companies who are on the Cantos client list.

Amongst our existing partners we are also seeing the beginnings of real development. Save the Children plans to expand the number and use of videos following our sales over the last year. BT Broadcast Services represents an important audience creation initiative for mobile devices by bringing together content owners, technology suppliers and mobile operators. Travel TV has introduced a new website and Forbidden has displaced RealNetworks as the technology.

Unanimis in the advertising sector had a slow start but trials with advertising agencies and clients are now beginning to come through. Our discussions with video production houses will assist penetration in the advertising field.

Corporate Management

One of the key tasks of our board is to achieve the appropriate balance between cash availability and spending on resources, both R&D and commercial. We believe that we have the right balance, but have the cash available to increase spending in line with the emergence of opportunities.

We are passionate about our dynamic technology. It can play such a key role in the worldwide change of communications methods that is taking place. Video in this new environment will become what text and sound have been up to today. By managing our resources well and continuously and persistently pushing out the frontiers of video compression we are ensuring that we will be well placed as a key participant as this change occurs.

Shareholders and Staff

The continuous support and encouragement of our shareholders and staff is appreciated; by regularly updating our website (www.forbidden.co.uk) we receive frequent comments and observations from shareholders and customers and these help to shape the changes and development of our products.

Victor Steel
Chairman