Interim Results, June 2005

Interim Results for the six months ended 30th June 2005

Sales for the six months ending 30 June 2005 were £17,851 (2004: £46,202). The loss in the six months was £344,922 (2004: £227,021), reflecting increased expenditure on business and product development. The Company continues to manage resources tightly. Liquid resources at the end of the period were £1.28 million compared with £1.61 million at the end of 2004.

The sales recorded in the first half of the year mask the exciting developments which have been taking place. Much of the past six months have been concentrated on working in partnership with some of the biggest programme producers. Their interest in FORscene has meant that we have been able to focus directly on creating customised features of relevance to these huge users of post-production facilities. We are now progressing into pilot usage over the next few months, and, assuming the pilots are successful, into more widespread use in 2006.

FORscene is a web-based video sharing platform, which runs automatically on PCs and Macs. It allows video to be logged, edited, reviewed and published all from a standard computer. All hosting is supported automatically. Forbiddens access to its own video compression technology has made it unusually well placed to develop video editing and publishing tools. As no installation is needed to run the software, the number of computers that can run FORscene is vast.

Initially we are targeting the large professional video post-production market and have established a partnership with Nats (as announced at the AGM in June), who are a large, independent, well-respected provider of post-production facilities.

Although FORscene is designed as a complete, vertically integrated product suite, initial pilots are being conducted at various points in the production process: logging (as being used by ITV), reviewing (three different BBC pilots) and publishing (on mobile phones via our Italian partners and on the web via our Finnish partners).

In September at IBC 2005 (Europes largest broadcaster convention), we plan to show how the recent advances in internet and computer technology can assist video production to move to a tapeless process. We believe that FORscene, which requires no capital cost from users and cuts out significant distribution and support costs and time, has the potential to become the next industry standard post-production tool.

With increasing penetration of high-end PCs and mobile phones, we are planning to complement mobile publishing with photographic and video capture straight from high-end mobile phones into FORscene. For the first time this will enable consumers to create video content on their phones for editing on standard PCs and to publish the resulting video for immediate viewing by friends and family. Our consumer/domestic version of FORscene, separately branded with the name Clesh, will be introduced later this year with its own website.

Work continues on developing security and surveillance products and these will be made available to the market in the coming months.

As described above, the exciting progress being made in both the professional market with FORscene and the consumer market with Clesh, give us high confidence that they will provide significant sales expansion in 2006 and beyond.

Victor Steel