TIDMSCAP
RNS Number : 3159J
Shariah Capital, Inc
29 June 2011
29 June 2011
Shariah Capital Inc. ("Shariah Capital" or the "Company")
Final Results for the year ended 31 December 2010
The Board of Directors of Shariah Capital is pleased to announce
the Company's final results for the year ended 31 December
2010.
Shariah Capital is a U.S.-based company that creates and
customizes Shariah compliant financial products and platforms and
provides selective Shariah consulting and advisory services
primarily to global financial institutions and investment firms
with product initiatives directed to Islamic investors.
The Company is best known for its pioneering efforts in Shariah
compliant hedge funds. It developed a proprietary software engine
for screening stocks electronically, devised a Shariah compliant,
arboon-based short sale methodology, and modified prime brokerage
documentation that led to one of the first Shariah compliant hedge
funds and fund of hedge funds.
2010 HIGHLIGHTS
In January 2010, the DSAM Kauthar Gold Fund, managed by
Tocqueville Asset Management, received the MENA Fund Manager Award
for Outstanding Performance & Innovation based on its 67.61%
net return in 2009. It won this prestigious award for the second
consecutive year, in January 2011, for its 27.02% return in
2010.
In March 2010, Shariah Capital and Barclays Capital successfully
restructured their relationship regarding the Al Safi Trust, a
comprehensive platform developed by Shariah Capital and Barclays
that provides investment managers with Shariah screening and
Shariah compliant short sale solutions as well as prime brokerage,
administration, auditing, and trustee oversight within a
pre-established Cayman trust framework. As a result of the
restructuring, Shariah Capital assumed exclusive marketing and
operational responsibilities for the Al Safi Trust. Barclays
continues as the platform's prime broker and custodian.
In April 2010, the Dubai Multi Commodities Centre Authority
(DMCCA) redeemed $140.5 million of the $200 million original seed
capital it had provided to the DSAM Kauthar Funds in 2008. The
Company successfully negotiated a new lock-up with DMCCA for a
minimum of $100 million until 30 June 2011. Total DSAM Kauthar Fund
assets as at 31 December 2010 were $121.8 million.
In September 2010, the Board of Dubai Shariah Asset Management
(DSAM), the Company's joint venture company with DMCCA, agreed to
pay Shariah Capital a one-off payment of $325,000 in quarterly
installments through DSAM's fiscal year ending 30 June 2011. This
payment is compensation to the Company for its strategic support of
the DSAM Kauthar Funds, including sales and marketing.
In December 2010, the Board voted to shift the sales strategy of
the DSAM Kauthar Funds to a retail focus. The Funds' audited track
records now meet and exceed the 2-year minimum required by most
retail distributors for inclusion on their platforms. Market
research indicates that few Shariah compliant, commodity-linked
alternative investment funds currently are available to MENA retail
investors.
Consequently, in an effort to raise new assets, the Company
successfully negotiated with managers of the DSAM Kauthar Gold and
DSAM Kauthar Energy funds to reduce investment minimums and improve
liquidity terms for retail-friendly versions of these funds. In
November 2010, DSAM also hired a 10-year industry veteran in Dubai
with direct experience in retail, takaful (Islamic insurance), and
the distribution platforms of global insurance firms. His
first-hand experience marketing investment funds to commercial bank
and insurance company distributors that target retail investors is
a key factor in implementing the DSAM Board's directive.
Although opportunities with institutional investors will
continue to be pursued actively, DSAM near term will focus its
marketing strategies on those banks, insurance companies, and
financial advisors in the region with product needs and retail
client demand for our unique DSAM Kauthar Funds.
PERSONNEL
The Company had no changes of personnel in 2010. It plans no
additional hires this year and believes its core management team
sufficient to meet the challenges of its commitment to the DSAM
Kauthar Funds in 2011.
On 3 May 2011, Shaykh Yusuf Talal DeLorenzo left the Company as
Chief Shariah Officer and as a member of the Board of
Directors.
FINANCIAL REVIEW
During the twelve months ended 31 December 2010, Shariah Capital
realized, for book purposes, a net loss of $353,954 compared to a
net loss of $1,637,819 for the same period in 2009. The Company
generated revenue of approximately $1,280,666 in 2010 compared to
revenue of approximately $1,535,000 for the same period in 2009.
The revenue decline is directly attributable to the $140.5 million
DMCCA redemption. Loss per share decreased to $0.005 in 2010
compared to $0.03 in 2009. The lower loss per share is attributable
mainly to decreases in expenses and, in particular, to an expense
reduction of over $830,000 for stock-based compensation.
The Company recorded income attributable to its unconsolidated
DSAM joint venture of $20,314 in 2010. An equity loss of
approximately $350,000 was recorded for this joint venture in
2009.
Expenses for the Company declined to $1,693,578 in 2010 from
$2,871,294 in 2009. This decrease is attributable primarily to
lower stock-based compensation and reduced payroll expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's fee receivables, cash, and cash equivalents stood
at approximately $4.5 million at the end of 2010, of which over
$4.31 million was held in cash and cash equivalents. This compares
to cash, cash equivalents, certificates of deposit and fee
receivables at the end of 2009 of approximately $5.1 million. Fee
receivables of approximately $202,000 were attributable primarily
to advisory fees for the Al Safi Trust platform earned in the
fourth quarter of 2010 and paid in January, 2011. The Company
believes its cash and cash equivalent position is sufficient to
meet ongoing and budgeted operations.
OUTLOOK
In spite of DSAM's award winning fund performance the Company
believes the alternative fund market, particularly in the Middle
East, remains extremely challenging. As a result, it will continue
to cut costs, cap expenses, and drive business opportunities where
it can judiciously safeguard cash and leverage the fund managers'
continuing performance. Presently, the Company is in active
discussions with DMCCA regarding the extension of DMCCA's lock-up
of seed capital in the DSAM Kauthar Funds. There is no certainty
these discussions will be successful. DMCCA has notified the
Company that it will redeem its investment, currently valued at
approximately $14.5 million, in the DSAM Kauthar Natural Resources
Fund on 30 June 2011. This fund will be closed at that time.
The Company is also in active negotiations regarding a new
retail opportunity for DSAM and two of its Kauthar funds. There is
no agreement at this time between the partners on funding a budget
for DSAM's upcoming 2011-2012 fiscal year. If the Company is
successful in these discussions, it will focus the majority of its
resources supporting the rolling out DSAM's new retail sales
strategy. It will do so against the backdrop of tumultuous local
equity markets, illiquidity resulting from depressed Gulf real
estate values, and the caution created by the Middle East political
unrest of the Arab Spring.
We remain determined to meet every challenge and pursue every
opportunity with commitment and purpose.
We are grateful to our shareholders for their continued
confidence and support.
Eric Meyer
Chairman & Chief Executive Officer
Enquiries:
Eric Meyer
Chairman & CEO
Shariah Capital Inc.
125 Elm Street
New Canaan, CT 06840
Office: +1 (203) 972-0331
Fax: +1 (203) 972-0229
Email: emeyer@shariahcap.com
Website: www.shariahcap.com
Martin Smith
Investec Investment Banking
Switchboard: +44 20 7597 5970
Shariah Capital, Inc.
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 2010 AND 2009
BALANCE SHEET
December 31, 2010 2009
---------------------------------------------- ------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 4,319,166 $ 1,932,629
Certificates of deposit 2,725,722
Fees receivable, less allowance for
doubtful accounts
of approximately $20,000 and $0 for 2010
and
2009, respectively 202,757 434,732
Due from related parties 160,640 111,527
Prepaid expenses and other current assets 213,426 28,040
Investment in DSAM Joint Venture 17,973
Total current assets 4,913,962 5,232,650
Property and equipment, net 6,812 6,463
------------ ------------
$ 4,920,774 $ 5,239,113
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 129,120 $ 103,533
Due to related party 8,425
Investment in DSAM Joint Venture 2,341
------------ ------------
Total current liabilities 137,545 105,874
------------ ------------
Stockholders' equity
Common stock, $.01 par value, 70,000,000
shares
authorized; 61,744,132 shares issued and
61,670,232
outstanding at 2010 and 2009 617,441 617,441
Additional paid-in capital 12,587,729 12,583,785
Accumulated deficit (8,316,598) (7,962,644)
Treasury stock at cost, 73,900 shares at
2010 and 2009 (105,343) (105,343)
------------ ------------
Total stockholders' equity 4,783,229 5,133,239
------------ ------------
$ 4,920,774 $ 5,239,113
STATEMENT OF OPERATIONS
Years Ended December 31, 2010 2009
----------------------------------------------- ----------- ------------
Revenue
Advisory fee income $ 1,028,167 $ 1,394,963
Consulting fee income 252,499 113,166
Expense reimbursement 27,300
----------- ------------
Total revenue 1,280,666 1,535,429
----------- ------------
Expenses
Payroll and employee benefits 980,082 1,169,329
AIM expenses 85,336 91,130
Bad debt expense 20,416
Computer expenses 20,948 101,848
Depreciation 2,587 3,036
Insurance 57,904 57,912
Marketing 15,742 17,197
Office expense and supplies 11,462 14,708
Professional fees and other 347,760 389,728
Registrar fees 13,162 13,522
Rent 74,025 96,175
Other taxes 27,880 15,810
Stock-based compensation 3,944 836,047
Telephone 9,732 12,291
Travel and entertainment 22,598 52,561
----------- ------------
Total expenses 1,693,578 2,871,294
----------- ------------
Loss from operations (412,912) (1,335,865)
Other income
Interest and dividend income 38,644 48,797
Income (loss) attributable to unconsolidated
joint venture 20,314 (350,751)
----------- ------------
Net loss $ (353,954) $ (1,637,819)
Loss per share, basic and diluted $ (0.01) $ (0.03)
Weighted average shares outstanding, basic
and diluted 60,344,132 60,250,707
STATEMENT OF CASH FLOWS
Years Ended December 31, 2010 2009
------------------------------------------------ ---------- ------------
Cash flows from operating activities
Net loss $ (353,954) $ (1,637,819)
Adjustments to reconcile net loss to net
cash
used in operating activities:
Stock-based compensation 3,944 836,047
(Income) loss attributable to
unconsolidated joint venture (20,314) 350,751
Unrealized depreciation (appreciation) 3,226 (3,221)
Depreciation 2,587 3,036
Bad debt expense 20,416
Changes in operating assets and
liabilities:
Fees receivable 211,559 (152,359)
Due from related parties (40,688) 69,153
Prepaid expenses and other current
assets (185,386) 43,621
Accounts payable and accrued expenses 25,587 (43,397)
---------- ------------
Net cash used in operating activities (333,023) (534,188)
---------- ------------
Cash flows from investing activities
Purchase of certificates of deposit (1,160,005)
Redemptions of certificates of deposit 2,722,496 220,594
Purchase of property and equipment (2,936) (1,057)
Investment in DSAM Joint Venture (354,809)
---------- ------------
Net cash provided by (used in) investing
activities 2,719,560 (1,295,277)
---------- ------------
Cash flows used in financing activities,
Purchase of treasury stock (20,443)
---------- ------------
Net increase (decrease) in cash and cash
equivalents 2,386,537 (1,849,908)
Cash and cash equivalents, beginning of year 1,932,629 3,782,537
---------- ------------
Cash and cash equivalents, end of year $ 4,319,166 $ 1,932,629
Supplemental disclosures of cash flow
information:
Cash paid for franchise taxes $ 27,880 $ 15,810
STATEMENT OF CHANGES IN STOCKHOLDERS' CAPITAL
Years Ended December 31,
2010 and 2009
--------------------------- -------- ----------- ------------ ---------- --------------
Additional Total
Common Stock Paid-in Accumulated Treasury Stockholders'
Shares Amount Capital Deficit Stock Equity
----------- -------- ----------- ------------ ---------- --------------
Balances,
December 31,
2008 61,744,132 $ 617,441 $ 11,747,738 $ (6,324,825) $ (84,900) $ 5,955,454
Stock-based
compensation 836,047 836,047
Purchase of
treasury
stock (20,443) (20,443)
Net loss (1,637,819) (1,637,819)
----------- -------- ----------- ------------ ---------- --------------
Balances,
December 31,
2009 61,744,132 $ 617,441 $ 12,583,785 $ (7,962,644) $ (105,343) $ 5,133,239
Stock-based
compensation 3,944 3,944
Net loss (353,954) (353,954)
----------- -------- ----------- ------------ ---------- --------------
Balances,
December 31,
2010 61,744,132 $ 617,441 $ 12,587,729 $ (8,316,598) $ (105,343) $ 4,783,229
NOTES TO FINANCIAL STATEMENTS
1. Nature of operations
Shariah Capital, Inc. (the "Company") was incorporated on
September 6, 2006 as a Delaware Corporation. The Company creates
and customizes Shariah-compliant financial products and platforms
and provides Shariah consulting and advisory services primarily to
financial institutions and investment management firms with product
initiatives directed to Islamic investors in the Middle East and
Far East and, specifically to, Islamic institutional and high net
worth investors. The Company has built proprietary solutions
endorsed by prominent Shariah scholars that enable hedge fund and
other alternative investment managers to manage their portfolios
consistent with their existing strategies and processes while
complying with Shariah. The Company explores business opportunities
with financial and investment management firms in Europe, Asia and
the United States.
2. Summary of significant accounting policies
Basis of Presentation
The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of
America ("GAAP").
These financial statements were approved by management and
available for issuance on June 27, 2011. Subsequent events have
been evaluated through this date.
Cash and Cash Equivalents and Concentration of Credit Risk
Cash and cash equivalents include cash held in banks and money
market funds with original maturities of three months or less. The
Company maintains cash balances in certain financial institutions
which, at times, may exceed federally insured limits. The Company
has not experienced any losses on these accounts, and believes it
is not subject to any significant credit risk.
Fees Receivable and Allowance for Doubtful Accounts
Fees receivable consist of advisory fees and consulting fees.
Advisory fees are based on the percentage of the net assets of the
fund for which the Company serves as the Shariah advisor.
Consulting fees primarily consist of up-front non-refundable fees
earned upon the commencement of the engagement, pursuant to the
service agreements; a progress fee based upon completion of certain
deliverables and a final payment based upon the completion of the
consulting and advisory services. Advisory fees and consulting fees
are recognized in the year they are earned. On a periodic basis,
the Company evaluates its fees receivable and determines if an
allowance for doubtful accounts is necessary, based on the history
of collections and current credit conditions. The Company recorded
an allowance for doubtful accounts of approximately $20,000 at
December 31, 2010. No allowance for doubtful accounts was deemed
necessary at December 31, 2009.
Property and Equipment
Property and equipment is stated at cost less accumulated
depreciation. The Company provides for depreciation utilizing the
straight-line method over the estimated useful lives of the related
assets. Computer equipment is depreciated using an estimated useful
life of five years. Expenditures for repairs and maintenance are
charged to expense as incurred.
Long-Lived Assets
The Company accounts for long-lived assets under GAAP which
requires the Company to review for impairment of long-lived assets,
whenever events or changes in circumstances indicate that the
carrying amount of an asset might not be recoverable. When such an
event occurs, management determines whether there has been an
impairment by comparing the anticipated undiscounted future net
cash flows to the related asset's carrying value. If an asset is
considered impaired, the asset is written down to fair value, which
is determined based either on discounted cash flows or appraised
value, depending on the nature of the asset. The Company did not
have any impairment losses on long-lived assets for the years ended
December 31, 2010 and 2009.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
Stock-Based Compensation
GAAP requires an entity to measure the cost of employees
services received in exchange for stock-based awards based on the
grant date fair value of the awards. The grant date fair value of
employee restricted stock-based awards will be estimated based on
the market price of the Company's stock on the date of the grant.
All stock-based awards granted to employees are recognized as
compensation expense over the service period (generally the vesting
period) in the financial statements based on their fair values
established at the time the awards are granted. GAAP requires the
Company to estimate the future forfeitures which has an impact on
stock-based compensation expense. GAAP also requires the
realization of tax benefits in excess of amounts recognized for
financial reporting purposes to be recognized as a financing
activity rather than an operating activity in the statements of
cash flows.
If an award is modified after the grant date, incremental
compensation expense, if any, will be recognized in an amount equal
to the excess of the fair value of the modified award over the fair
value of the original award immediately before modification.
For non-employee stock-based awards, the Company recognizes an
expense in accordance with GAAP and values the stock-based award on
the fair value of the grant date of the award with subsequent
adjustments based on the fair value of the award as it vests. The
fair value of the restricted stock-based award is estimated based
on the market price of the Company's stock.
Income Taxes
The Company is responsible for minimum taxes to the state of
Connecticut. Due to losses incurred for the years ended December
31, 2010 and 2009, no income tax provision for federal taxes has
been recorded in the accompanying financial statements.
The Company complies with the provisions of GAAP, which requires
an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial
statement and tax bases of assets and liabilities that will result
in future taxable or deductible amounts, based on enacted tax laws
and rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred income tax assets
to the amount expected to be realized.
The determination of the Company's provision for income taxes
requires significant judgment, the use of estimates, and the
interpretation and application of complex tax laws. Significant
judgment is required in assessing the timing and amounts of
deductible and taxable items and the probability of uncertain tax
positions being sustained upon examination by the applicable taxing
authority. The benefits of uncertain tax positions are recorded in
the Company's financial statements only after determining a more
likely than not probability that the uncertain tax positions will
withstand challenge, if any, from tax authorities. When facts and
circumstances change, the Company reassesses these probabilities
and records any changes in the financial statements as appropriate.
Accrued interest and penalties related to income tax matters are
classified as a component of income tax expense.
In accordance with GAAP, the Company is required to determine
whether a tax position is more likely than not to be sustained upon
examination by the applicable taxing authority, including
resolution of any related appeals or litigation processes, based on
the technical merits of the position. The Company is subject to
income tax examinations by major taxing authorities for all tax
years since inception. The tax benefit recognized is measured as
the largest amount of benefit that has a greater than fifty percent
likelihood of being realized upon ultimate settlement.
De-recognition of a tax benefit previously recognized results in
the Company recording a tax liability that reduces stockholder's
equity. The Company recognizes interest accrued and penalties
related to unrecognized tax benefits in income tax payable, if
assessed. No interest expense or penalties have been recorded as of
and for the year ended December 31, 2010. The Company may be
subject to potential examinations by U.S. federal, U.S. state or
foreign jurisdictions in the areas of income taxes. These potential
examinations may include questioning the timing and amounts of
deductions, the nexus of income among various jurisdictions and
compliance with U.S. federal, U.S. state and foreign tax laws. The
Company's management does not expect that the total amount of
unrecognized tax benefits will materially change over the next
twelve months.
Fair Value - Definition and Hierarchy
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (i.e., "the exit
price") in an orderly transaction between market participants at
the measurement date.
In determining fair value, the Company uses various valuation
approaches. A fair value hierarchy for inputs used in measuring
fair value maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are those that
market participants would use in pricing the asset or liability
based on market data obtained from sources independent of the
Company. Unobservable inputs reflect the Company's assumptions
about the inputs market participants would use in pricing the asset
or liability developed based on the best information available in
the circumstances. The fair value hierarchy is categorized into
three levels based on the inputs as follows:
Level 1 - Valuations based on unadjusted quoted prices in active
markets for identical assets or liabilities that the Company has
the ability to access. Valuation adjustments and block discounts
are not applied to Level 1
securities. Since valuations are based on quoted prices that are
readily and regularly available in active markets, valuation of
these securities does not entail a significant degree of
judgment.
Level 2 - Valuations based on quoted prices in markets that are
not active or for which all significant inputs are observable,
either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and
significant to the overall fair value measurement.
Fair Value - Valuation Techniques
The Company values investments in mutual funds, which are
included in cash and cash equivalents, based on the quoted market
price of the net asset value of shares held at year end.
Certificates of deposit are based on a market value pricing
model.
Loss Per Share
Loss per share is based on the weighted average number of common
shares outstanding. The Company complies with GAAP, which requires
dual presentation of basic and diluted earnings per share on the
face of the statement of operations. Basic loss per share excludes
dilution and is computed by dividing income available to common
stockholders by the weighted-average common shares outstanding for
the year.
The unvested weighted average of the restricted stock granted to
employees of 1,400,000 and 1,493,425 for the years ended December
31, 2010 and 2009, respectively, are antidilutive and have been
excluded from the computation of loss per share.
Treasury Stock
No treasury shares were acquired during 2010. In December 2009,
the Company acquired 31,450 shares of common stock for
approximately $0.65 from an employee.
3. Property and equipment
Property and equipment consists of the following at December 31,
2010 and 2009:
2010 2009
Computer Equipment $12,896 $ 16,151
Less Accumulated Depreciation $6,084 $ 9,688
$6,812 $ 6,463
Depreciation expense amounted to approximately $2,600 and $3,000
for the years ended December 31, 2010 and 2009, respectively.
4. Fair value measurements
The Company's assets recorded at fair value have been
categorized based upon a fair value hierarchy as described in the
Company's significant accounting policies in Note 2.
The following table presents information about the Company's
assets measured at fair value as of December 31, 2010 and 2009:
2010 2009
Quoted Prices in Quoted Prices in
Active Markets for Active Markets for
Identical Assets Identical Assets
(Level 1) (Level 1)
_______________ _______________
Assets (at fair value)
Investments in money market funds $ 3,259,318 $ 498,605
Certificates of Deposit $ - $ 2,725,722
5. Stock-based compensation
The Company granted 2,700,000 shares of restricted stock on
December 7, 2006 to several employees which vest over three years.
The fair value of the shares on the grant date was $2,700,000. In
December 2007, the Company amended the terms of the granted
restricted stock awards. The amendment increased the December 7,
2006 shares for certain employees by 5% or 47,500 shares, and
extended the vesting period from December 7, 2007 to March 31,
2008, subject to earlier acceleration at the option of the Company.
In December 2008, the Company amended the terms of the granted
restricted stock awards for two of its employees. The amendment
extended the vesting date for 600,000 shares of common stock from
December 7, 2008 to December 7, 2009.
In December 2009, the Company amended the terms of the granted
restricted stock awards for two of its employees. The amendment
extended the vesting date for 1,400,000 shares of common stock from
December 7, 2009 to December 7, 2010. During 2010, the Company
further amended the terms of the granted restricted stock awards
for the same two employees, extending the vesting date for
1,400,000 shares of common stock from December 7, 2010 to August
31, 2011.
The fair value of each restricted stock award was estimated on
the date of grant or the date of modification, if there was an
additional incremental compensation cost, based on the market price
of the Company's stock at that date.
Stock-based compensation expense amounted to approximately
$4,000 and $836,000 for the years ended December 31, 2010 and 2009,
respectively.
6. Income taxes
The Company has an available net operating loss carry forward of
approximately $6,176,000 to offset future taxable income expiring
at various dates through 2030.
The Company has a deferred tax asset of approximately $2,600,000
and $2,400,000 at December 31, 2010 and 2009, respectively. In
recognition of the uncertainty regarding the ultimate amount of
income tax benefit to be derived, the Company has recorded a
valuation allowance at December 31, 2010 and 2009 for the full
amount of the deferred tax asset.
7. Commitments and contingencies
Operating Leases
In February 2010, the Company entered into an operating lease
for its corporate office in Connecticut, which expired in January
2011, with an optional one year extension. The Company is currently
renting its corporate office on a month to month basis. Rent
expense amounted to approximately $74,000 and $96,000 for the years
ended December 31, 2010 and 2009, respectively.
Employment Agreements
The Company entered into employment agreements with its
management employees. Agreements with two of three management
employees terminate on August 31, 2011, with one such agreement
providing for an extension at the option of the Company for an
additional year. The employment agreement with the Chairman and
Chief Executive Officer of the Company provides for termination
upon 12 months notice and a $650,000 termination fee.
Annual base salaries of approximately $796,000 and $1,050,000
were paid to management employees for the years ended December 31,
2010 and 2009, respectively. The Company paid cash bonuses to
certain employees in the amount of approximately $0 and $1,000 for
the years ended December 31, 2010 and 2009, respectively.
Employment Agreements (continued)
During 2010, the Company entered into an employment agreement
with one management employee to provide housing, transportation and
moving allowances in the amount of approximately $163,000, of which
approximately $92,000 was expensed for the year ended December 31,
2010.
Non-Executive Director Service Agreement
A non-executive director for the Company received compensation
of approximately $15,000 and $16,000 for serving as a member on the
Board of Directors of the Company for the years ended December 31,
2010 and 2009, respectively.
8. Related party transactions
During 2008, the Company, in collaboration with various
professional organizations, formed the Al Safi Trust, a Cayman
Islands trust with related sub-trusts ("Al Safi"). Al Safi is a
Shariah-compliant alternative investment platform, and the first
known platform to provide an infrastructure for long and short-term
Shariah-compliant investments. The Company is the Shariah advisor
and receives a Shariah advisory fee based on the net asset value of
all Al Safi sub-trusts. In September 2008, three sub-trusts were
formed on Al Safi, each of which was seeded with $50,000,000 by the
Dubai Multi Commodities Centre Authority ("DMCCA"). In November
2008, a fourth sub-trust was seeded by DMCCA in the amount of
$50,000,000, for an aggregate total of $200,000,000 in invested
capital. As of December 31, 2010, assets under management in Al
Safi were approximately $122,000,000. Advisory fee income from Al
Safi amounted to approximately $1,028,000 and $1,395,000 for the
years ended December 31, 2010 and 2009, respectively. The reduction
in advisory fee income resulted from a redemption of seed capital
by the DMCCA from Al Safi. Consulting fee income from Al Safi
amounted to approximately $20,000 and $23,000 for the years ended
December 31, 2010 and 2009, respectively.
In connection with forming Al Safi, the Company announced a
joint venture with DMCCA. The joint venture entity, Dubai Shariah
Asset Management Company, Ltd. ("DSAM") is owned 51 percent by
Dubai Commodity Asset Management ("DCAM"), which is wholly owned by
DMCCA, and 49 percent by the Company. The investment is accounted
for under the equity method of accounting for long-term
investments. In conjunction with the joint venture, DMCCA purchased
a 4.99% equity share of the Company and an executive from DMCCA was
elected to the Company's Board of Directors as a non-executive
director.
DSAM develops and manages Shariah-compliant investment products
focused on commodities. DSAM has the right to assess a fee based on
a percentage of the net asset value of the four sub-trusts seeded
by the DMCCA (exclusive of capital invested by the DMCCA).
Consulting fee income from DSAM amounted to approximately
$162,000 and $0 for the years ended December 31, 2010 and 2009,
respectively. In addition, the Company is the Shariah advisor to
DMCCA for related Shariah-compliant investments. Consulting fee
income from the DMCCA amounted to approximately $70,000 and $90,000
for the years ended December 31, 2010 and 2009, respectively.
The Company's income (loss) attributable to DSAM amounted to
approximately $20,000 and ($351,000) for the years ended December
31, 2010 and 2009, respectively and is included in the accompanying
statements of operations.
The Company had a receivable from DSAM in the amount of
approximately $161,000 and $112,000 at December 31, 2010 and 2009,
respectively, representing reimbursement of expenses from DSAM and
is reported as a component of due from related parties in the
accompanying balance sheets.
The Company loaned an employee $50,000 in January 2010, which is
secured by the common stock of the Company held by the employee.
The loan bears interest at a rate of 1.00% per annum plus prime
(3.25% at December 31, 2010) and matures in August 2011 and is
reported as a component of prepaid expenses and other current
assets in the accompanying balance sheets.
9. Major customers
The Company had advisory fee income from one related party that
accounted for 100% of the Company's total advisory fee income for
the years ended December 31, 2010 and 2009.
The Company has two related parties that account for 100% of its
fees receivable and consulting fee income as of and for the years
ended December 31, 2010 and 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEMESAFFSEDM
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