Transfer of assets from Dolphin to Numascale complete, details on initial offering to shareholders in Dolphin
Dolphin Press Realease 14. August 2008
Effective on August 13, 2008 all assets, intellectual property, personnel and activities related to the development of NumaChip was transferred to Dolphin's wholly owned subsidiary Numscale AS.
The transfer was executed through a subscription for shares wherein Dolphin acquired 2,079,699 shares at a share price of NOK 10 against a total consideration of NOK 20,796,990.
The total consideration consists of:
Total value of IP and other assets: NOK 17,106,160 Cash and paid expenses: NOK 3,690,830
It was further resolved to execute an initial private offering of shares in Numscale to shareholders of Dolphin as of August 14th 2008. Eligible shareholders may subscribe for 1 share in Numascale for every 15.64 shares they own in Dolphin.
The subscription period for this offering will be August 18 to September 1, 2008.
The offer price in this initial offering to Shareholders in Dolphin will be NOK 6.90 per share. The development of the technology behind the NumaChip has taken well over 10 years. The current chip implementation commenced in 2006 and in the opinion of the Board of Directors in Dolphin and Numascale, the offer price represent an attractive investment opportunity for the current shareholders in Dolphin.
Maximum number of shares in the offering will be 1,450,000 and maximum proceeds will be NOK 10,005,000. Numascale has 2,179,699 outstanding shares after the transaction with Dolphin and prior to the offering to eligible shareholders. The company will have no debt at the time of the offering. Operating cash was approximately NOK 3 million on July 28th 2008.
The stock issue will be managed by Orion Securities. A prospectus will be mailed to all eligible shareholders and will contain further details on company strategy and the offering. The prospectus will also be available on www.dolphinics.com and www.numascale.com.
The Board in Numascale has resolved to implement a program for share-based compensation. Such program will follow the same guidelines and limitations that govern the option programs in Dolphin, and eligible employees must cancel current options in Dolphin in order to gain rights to receive options in Numascale.
The sale of the NumaChip assets valued at about NOK 17 million represents taxable income for Dolphin. This will reduce tax loss to be carried forward accordingly. Tax loss to be carried forward amounted to about NOK 90 million as of March 31st 2008. As of the same date, booked value of the NumaChip-technology in Dolphin was NOK 18.2 million, and Dolphin will book a loss on sale of the NumaChip assets equal to the difference between booked value of NumaChip as of June 30 and the value of the NumaChip assets in the transaction.
Any additional funding necessary to complete the development of NumaChip will be sought from Norwegian and international venture investors as well as industrial partners/investors.
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Since Dolphin announced the establishment of Numascale in June 2008, several important milestones have been achieved, including preliminary design hand-off to IBM, Numascale's manufacturing partner. Numascale anticipates delivering its revolutionary NumaChip product to the market in the first half of 2009.
NumaChip is expected to achieve the important milestone of physical prototype demonstration in Q3 and is on track for first customer sample delivery in Q1 2009. Validation of customer interest continues to grow with a number of commitments for evaluation of first samples.
The Numascale business has high future revenue potential. NumaChip enables computer system vendors to build scalable servers with the functionality of enterprise mainframes at the cost level of clusters. The technology unites all the processors, memory and IO resources in the system in a fully virtualized environment.
Systems based on NumaChip will support all classes of applications and yield the same high utilization levels as the very expensive mainframe systems. Such systems are usually utilized in the 90 - 100% range compared to clusters that are often utilized in the 60 - 70% range. Despite the lower utilization, clusters, are now totally dominating the rapidly growing market for high performance computing due to a price advantage of up to 30x vs. mainframes. NumaChip will deliver the economics of clusters but the power and functionality of mainframes.
NumaChip is based on a chip set design that was developed by Dolphin Interconnect Solutions several years ago. The chips were used in high-end systems from Convex and Data General. New silicon technology and new chip interface standards have made it feasible to re-implement and bring to market the technology in a cost effective new single chip design.
NumaChip has potential for horizontal coverage of several market segments spanning from high performance computing to transactional database, web services and storage systems. The early adopter target market is in high performance computing (HPC). This market has an appetite for new technology with many applications already enabled for parallel processing. The HPC market is growing strongly with growth levels of 35-45% per year in the target segments for NumaChip. The company is engaged with a number of high profile potential customers within the high performance computing and high-end server markets.
Numascale will complete the development of the NumaChip product and build a long-term business based on its proprietary cache coherent technology. To fund this development and market introduction Numascale will offer shares preferentially to existing Dolphin shareholders.
After the spin off of Numascale, Dolphin will consist of a sales, marketing, and development operations in Boston and Oslo. It will focus on its growing Dolphin Express business. The strategy and outlook for the Dolphin Express business remains unchanged. Recent customer-and partner interaction reinforce the company's belief that it is well positioned to achieve high growth in providing interconnect solutions based on Dolphin Express to the internet content server market.
This restructuring of Dolphin and Numascale enables both entities to focus on their unique market opportunities and develop the appropriate infrastructure to service their business models. Numascale as a standalone business represents an attractive investment opportunity in an innovative semiconductor development company. Dolphin is a focused and very cost effective business, uniquely positioned to take advantage of its high growth potential.
Dolphin will consolidate Numascale in the group accounts from the effective date of the transfer as long as its ownership share remains above 50%.
For further information, please contact:
Tim Miller, CEO, telephone 1 508 7405 949
Kåre Løchsen, CEO, Numascale, +47 950 88 731