RIP: Emblaze kills First Else

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RIP: Emblaze kills First Else
Hate to say it but we were right: Emblaze just announced that it's shutting down the First Else handset. $40 million and the hopes of many (ok, a few) gone in an instant. In a regulatory announcement issued today, Emblaze states the following:
Due to critical delays in deliveries and the current status of the project, the board has now decided to cease any further investment towards manufacturing of the First ELSE mobile device and to concentrate efforts only on licensing the ELSE Intuition platform and technology in order to realize its potential upside.
So there's still hope that we'll see the First Else user experience applied elsewhere if Emblaze can find a buyer. See the full release after the break.

[Thanks, Yair M.]
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Ra'anana, Israel, 30 June 2010 - Further to the management statement dated 18
June 2010, Emblaze is hereby providing the following updates:

ELSE Mobile

In October 2007, the Company announced that its subsidiary, ELSE Ltd. (formerly
Emblaze Mobile), partnered with ACCESS CO. LTD and Sharp Corporation, embarked
on an ambitious project targeted to introduce an innovative approach to mobile

In November 2009, ELSE first unveiled the First ELSE# mobile device, which was
designed to showcase the capabilities and advantages of ELSE Intuition#, its
new Linux based mobile platform.ELSE's products attracted excitement and
interest from potential partners, as well as the media and mobile analysts, for
its unique innovation and user experience.

ELSE' management have since invested considerable time and effort to secure a
partnership for the sale of the First ELSE mobile devices. While there was
encouraging interest in the device by potential partners, management was not
able to confirm a deal on terms acceptable to Emblaze to proceed to the
production of the device.

Due to critical delays in deliveries and the current status of the project, the
board has now decided to cease any further investment towards manufacturing of
the First ELSE mobile device and to concentrate efforts only on licensing the
ELSE Intuition platform and technology in order to realize its potential

This decision will drastically reduce the Company's operational and development
costs and will positively contribute to its route to profitability.

The Company's management believes that this decision aligns well with the
Group's overall core competency and skills in the software arena, which
includes the following:

Formula Systems

Formula Systems, through its subsidiaries, is engaged in the development,
production and marketing of information technology solution and services. Its
appealing offerings coupled with aggressive cost-saving measures have made
Formula resilient to the recession and enabled its constant growth in revenue
and net income. For the period ending 31 March 2010, Formula reported
significant improvement in profitability with net income attributable to
Formula of $4.8 million, an increase of 41% compared to $3.4 million in first
quarter of 2009.
Going forward, Formula will continue to focus on profitability as well as
accretive acquisitions.

Emoze Ltd.
Emoze Ltd. is providing transparent, synchronized mobile push-messaging
solutions that include email, PIM (contacts and calendar) and a push content
platform for consumers, mobile operators, manufacturers and enterprises. Emoze
eliminates the need for mobile devices to check or poll servers, allowing for
real-time messaging on a far wider range of mobile devices.
Emoze can actually transform most low-end mobile devices into BlackBerry -like
devices, providing the same push mail, PIM and content service. Thanks to its
novel and efficient technology, Emoze is able to provide the ideal low-cost
push solution for the mass market.
ZONE-IP Ltd. of which Emblaze holds 71%, is engaged, through its subsidiary
Emblaze VCON Ltd., in the development and deployment of high-performance,
end-to-end videoconferencing solutions over IP and ISDN networks for
enterprises of all sizes, focusing on desk top solutions.

The Company would like to use this opportunity to provide update on additional
ongoing matters as follows:

Patent infringement:

In December 2009 the Company informed the market that it has notified Apple2
Inc. that the HTTP Live Streaming Application announced by Apple and its use in
Apple's iPhone and iPod2 touch (and recently in the iPad) devices, infringes
Emblaze's patents for media streaming technology. In February 2010, the Company
also notified Microsoft Corporation that its Smooth Streaming system infringes
on Emblaze's patents for media streaming technology.

The Company is currently engaged in discussions with both Apple and Microsoft
with the aim to reach an amicable resolution by licensing said IP. The Company
will evaluate its course of action pending the results of such discussions and
will provide an update to the market when it is appropriate to do so.

HM Revenue Customs
As reported by the Company in April 2007, the Company's UK subsidiary, Emblaze
Mobility Solutions Limited, is involved in a dispute with the HM Revenue
Customs ("HMRC") regarding a decision made by the HMRC to withhold VAT
reclaims and raise an assessment relating to VAT return in the sum of
approximately £8.8 millions. The legal proceedings in this matter are still
ongoing and it is expected that the closing submissions will be scheduled for
July 2010. Further update will be provided following developments in this

Malam claim
On 7 March 2001, Malam Systems Ltd. filed a claim against Geo Interactive Media
Group Ltd. (now Emblaze Ltd.) and against its founding directors claiming for
approximately 29% of the Company's issued share capital. The Company's legal
advisors as well as its founding directors were (and still are) of the opinion
that there are no merits to the claim. Nevertheless, the Company's board of
directors decided to settle this claim by payment of US$1 million by the
Company as the legal costs alone were expected to reach such an amount. The
Company expects to recover part of its payment from its insurers.
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