IMM Immupharma Plc

Reverse Takeover FOR IMMEDIATE RELEASE 28 January 2005 INTERNET MUSIC & MEDIA PLC PROPOSED ACQUISITION OF TIMESTRIP, PLACING, CHANGE OF NAME, EXTRAORDINARY GENERAL MEETING AND ADMISSION TO TRADING ON AIM Timestrip to join AIM through reversal into Internet Music & Media plc * Internet Music & Media to acquire entire issued share capital of Timestrip for �6.4 million and will be renamed Timestrip plc to reflect the new business * Purchase price is to be satisfied by the issue of 160,000,000 new Ordinary Shares at 4p per share to the Vendors on the sale of their Timestrip shares * A placing has been agreed to raise a maximum of �3m for working capital and development purposes * Timestrip, founded in 2000, has developed an inexpensive and versatile technology for accurately measuring lapsed time. Timestrip� smart labels contain a liquid which migrates across the label, enabling users of perishable food and other products to monitor for how long an item has been open or in use. The technology can be implemented as an external label or can be fully integrated into products and product packaging. * The Timestrip� technology is relevant to a wide range of food and non-food products which, once opened, should be used or replaced within a recommended time. In 1997, in the UK alone, over 100 billion food items were packaged. * Expiry dates feature prominently in five international mass markets: Food Retailing; Catering and Food Services; Consumables; Pharmaceuticals; Medical Devices * The Board envisages that Timestrip's main route to market will be through supply and license agreements with manufacturers and packaging companies who will integrate Timestrips� in their product or packaging. * Timestrip has already supplied customers both in the US and UK in the Food Service markets and is progressing with its existing development contracts for integration of the technology into devices and packaging. * Nominated Adviser is Beaumont Cornish limited and Broker is Falcon Securities limited Leo Knifton, Chairman commented:- "The Board is very excited by this deal as we believe that the Timestrip� technology will become a household name through its integration with a huge range of perishable products. It is testimony to the quality of the technology that serious interest is being shown by a number of multinational companies and I have no doubt that the business is poised for an exciting period of significant growth." INTERNET MUSIC & MEDIA PLC PROPOSED ACQUISITION OF TIMESTRIP, PLACING, PROPOSED WAIVER OF THE REQUIREMENTS OF RULE 9 OF THE CITY CODE, CHANGE OF NAME, EXTRAORDINARY GENERAL MEETING AND ADMISSION TO TRADING ON AIM INTRODUCTION The Company is pleased to advise you that today the Company announced that it had conditionally agreed to acquire the entire issued share capital of Timestrip. The purchase price of �6.4 million is to be satisfied by way of the issue of 160,000,000 new Ordinary Shares at 4p per share to the Vendors on the sale of their shares in Timestrip. The scale of the Acquisition in relation to your Company, which will result in a change of control of the Company and a fundamental change in the business, means that the Acquisition will constitute a reverse takeover of the Company under the AIM Rules. Further, the size of the collective shareholding of the Concert Party in the Company following implementation of the Proposals will constitute a change of control under the City Code. Accordingly, the Circular to be published in relation to the Acquisition requires the prior approval of the Panel on Takeovers and Mergers and the Acquisition requires the prior approval of Shareholders at an Extraordinary General Meeting to be confirmed. Further details of the Acquisition are set out below. On completion of the Acquisition, all the present Directors of the Company, with the exception of Mr Stephen Oakes, will resign and the Proposed Directors will be appointed to the Board. Up to 75,000,000 new Ordinary Shares are to be placed, conditional on Admission, with investors at 4p per Ordinary Share to raise up to �3m, which will be principally used for working capital purposes of the Enlarged Group. Further details of the Placing are set out below. BACKGROUND TO AND REASONS FOR THE ACQUISITION At the meetings of Shareholders and creditors held on 3 November 2004, the proposal to effect a Company Voluntary Arrangement of the Company pursuant to the Insolvency Act 1986 was approved, and the ordinary share capital was re-structured. Leo Knifton, Nigel Weller and Stephen Oakes were then appointed to the Board to review suitable businesses. Trading in the Ordinary Shares of the Company re-commenced on 9 November 2004 at the time of publication of the Company's interim results for the six month period ended 30 June 2004. Arrangements for the proposed acquisition of Timestrip have now been concluded. The Directors believe that the Acquisition presents an opportunity to acquire a business with significant upside potential that would, if this potential could be realised, well justify the price being paid and therefore the dilution to existing shareholders, as is more fully explained below. INFORMATION ON TIMESTRIP Timestrip, based in Hitchin, Hertfordshire, has developed a smart label, the `Timestrip'�, which enables users of perishable food and other products to monitor for how long an item has been open or in use. The Timestrip� is a disposable multi-layer laminated label which contains a timing device consisting of a specialised porous material and a non-toxic liquid. Upon squeezing the label to activate, the liquid starts to move through the porous material by micro capillary action. A printed calibration on the top layer of the label allows the user to tell at any point in time how long the label has been active. The label is currently manufactured with adhesive backing enabling it to be attached to perishable goods as a reminder to use or replace the product. The label is designed to be easily customised and is capable of being embedded into the product packaging or the product itself. It can be activated automatically either upon first opening the package or upon first use of the product. The Timestrip� technology has created a product which the Board believes can be manufactured at a sufficiently low cost to be sold economically to product and packaging manufacturers for integration into their products. The solution provided by Timestrip� relates to the difficulty in monitoring relative expiry dates, such as "Use within two weeks of opening". The Timestrip � addresses this problem by reliably monitoring the lapse of time, providing a visual indication that the relative expiry date is approaching, thereby giving the user the opportunity to manage perishable items in a way that was previously problematic. Relative expiry dates feature prominently in five international mass markets: 1. Food Retailing - where it can be integrated into the packaging by the manufacturer or applied to the product by the consumer, who can purchase multipacks of Timestrip�. 2. Catering and Food Services - where it can supplement the current practice of writing the replacement date on a label or chart and will assist in the compliance with regulatory requirements in respect of food storage. 3. Consumables - where it can be integrated into product, packaging or replacement parts such as filters in vacuum cleaners or water jugs. 4. Pharmaceuticals - where, again, it can be integrated into the product or packaging by the manufacturer or applied by the consumer. 5. Medical Devices - where it can supplement the practice of writing reminder dates on labels or charts to assist staff and practitioners in monitoring lapsed time in processes such as wound management and non-critical procedures. These applications afford benefits to consumers, retailers and manufacturers alike. The common time frames for relative expiry dates are from 10 minutes up to 6 months at temperatures ranging from 70�C down to -17�C. The simplicity of this technology is important to the success of the product. It does not depend on a chemical reaction and can be customised to function in a wide range of temperature environments, yet within each environment can be relatively insensitive to temperature change. There is no need for moving parts, thereby enhancing reliability and consistency while enabling the product to be manufactured at low cost. The Timestrips� are currently manufactured in Even Yehuda, Israel. The production machinery, owned by Timestrip, is designed, built and operated in Israel. However, it is the intention of Timestrip to license the rights to manufacture and distribute Timestrips� to third parties in local markets. It is envisaged that a licensee will purchase machines, raw materials and support from Timestrip, paying a royalty based on units sold in the market for which the license is granted. The Board believes that Israel is a suitable location for research and development and for manufacturing. Israel has relevant customs concessions on imports and exports to and from Europe and North America, and the Board believes Israel has a competitive labour market with a competent technical skill base. The "know-how" for Timestrip� was born out of technology developed by Profile with whom Timestrip entered into a global exclusive license agreement in May 2001. Profile has agreed to transfer to Timestrip its rights and interests in the technology in return for the issue of 20,626 `B' Ordinary Shares of 0.1p each in Timestrip, to be issued prior to and included in the Acquisition, and a payment of �100,000 which is to be funded from the proceeds of the Placing. An international patent application covers a feature of the Timestrip� that is considered by the Proposed Directors to enable low cost production. The European Patent Office in January 2004 concluded that all claims in respect of the patent application are deemed to be novel, inventive and industrially applicable, and the application is now pending in major territories including North America, Europe, Japan, China, Australia and South Africa. Timestrip� is a trademark registered in the UK, the US, Canada and Europe. Timestrip was founded in December 2000 by Paul Freedman and in May 2001, Reuben Isbitsky, who was involved in the project from inception, formally joined Timestrip as a director. At the outset, the shareholding in Timestrip was split equally between its founders, Paul Freedman and Reuben Isbitsky. Subsequently, in four rounds of equity funding, Timestrip raised a total of �2,163,450 (before expenses) from some 58 private investors. STRATEGY Timestrip does not itself intend to develop significant manufacturing capability. Instead the new market potential for Timestrip� lends itself to a licensing strategy under which Timestrip will licence the rights to manufacture and distribute in local markets to customers, joint venture partners and distributors. The Board believes that the present manufacturing facilities in Israel have sufficient capacity to satisfy initial contracts and will seek to develop this capacity to support existing contracts and development in new markets. Timestrip would receive a licence fee for each Timestrip� manufactured by licensees and will seek to enhance revenue through the supply of key raw materials and support. The Board intends that Timestrip� is to be established as an international brand. The prospects for the proliferation of Timestrip� on a global basis are enhanced because target customers are predominantly multinational companies, several of whom have already entered into formal development contracts and working relationships with Timestrip. The Board envisages that the main channel to market will be through supply agreements with manufacturers and packaging companies who will integrate Timestrips� in their product or packaging. Timestrip has already launched Timestrip� in the food service sector in the UK where it has identified demand in the restaurant sector for a label that shows lapsed time by way of colour rather than written date information. It is expected that Timestrip� will be launched in the North American food services sector in 2005. The Proposed Directors have also identified the opportunity to sell Timestrip� as a value added promotional product to magazines and a variety of food and consumer product manufacturers. COMPETITION It is anticipated that the commercialisation of Timestrip� will stimulate competition at some point in the future, given the size of the market to which it has relevance. Nevertheless, the Board is not aware of any direct competition showing lapsed time in colour progression in the expiry date sector. There are, however, products whose purpose is to signal when product quality should be checked due to temperature exposure beyond a recommended threshold. There is also a consortium of business and universities working on RFID chip technology. Such chips will be able to contain far more information than bar codes and may even be able to show lapsed time with the use of additional hardware such as a scanner. CURRENT TRADING AND FUTURE PROSPECTS The Timestrip� technology is relevant to a wide range of applications in mass markets. In 1997, in the UK alone, over 100 billion food items were packaged. This figure demonstrates the sheer scale of the potential markets in which Timestrip� could be used. The current manufacturing process gives Timestrip the capability to generate significant gross margins. Furthermore the Board considers that the unit cost of manufacture can be reduced over time, enabling the Enlarged Group to target a unit sale price which the Board believes will prove a pricing point that could trigger the broadest mass market application. The existing development contracts and arrangements with manufacturers establish a pipeline of product development potential. The increased financial resources will provide the opportunity for the Board to bring these prospects to fruition. Furthermore new capital will enable the Enlarged Group to identify further potential for product integration with other multi-national brand-led businesses. As regards current trading, Timestrip started production in December 2004 on its initial order from Daymark for the Food Service market in North America and has made its first delivery to Dovemart for the UK market. In December 2004, Timestrip received an additional order from Daymark for delivery in February 2005. Even though the product is not set to be launched officially in the UK until later in the first quarter of 2005, Dovemart has already secured a listing for the product in one of the largest food service catalogues in the UK, and Timestrip has received several approaches from major food manufacturers specialising in supplying the catering sector. Timestrip is actively negotiating supply contracts with several consumer goods companies looking for a reminder label to add value to their existing product range and with potential distributors to the retail sector in North America and Asia. Timestrip is progressing with its existing development contracts for integration of the technology into devices and packaging. For example, in December 2004 an order for �19,000 was received from one customer to pay for additional tooling as the next stage in the project. Timestrip expects to start working on new projects in early 2005 as a result of discussions that have taken place in recent weeks. Timestrip is not yet generating sufficient level of sales to trade profitably or generate positive cash flow but is making progress towards these milestones by way of the launch in Food Services in North America and the UK as well as a number of other potential contracts in other sectors. ACQUISITION OF TIMESTRIP IMM will acquire all of the issued shares of Timestrip comprising 80,000 `A' Ordinary Shares of 0.1 pence each, and 85,304 `B' Ordinary Shares of 0.1 pence each (together "the Sale Shares"). The Sale Shares will be acquired for a total consideration valued at �6.4 million to be satisfied by the issue to the Vendors of 160,000,000 Ordinary Shares at an issue price of 4p per share. IMM will, in addition, issue `B' Warrants to subscribe for a total of 7,500,000 Ordinary Shares at an exercise price of 4p per share exercisable within two years after Completion. These warrants will be issued to the Vendors (other than the Proposed Directors) pro rata to their holdings of the Sale Shares. On completion of the Acquisition, IMM will also issue `C' Warrants which entitle the holders to subscribe for a total of 8,500,000 Ordinary Shares at an issue price of 0.02p per share exercisable after two years but not later than seven years after the date of issue. These warrants are to be issued to those individuals, namely Jeff Woyda, Frank O'Connor, Ilan Schragenheim and Avi Rabinovitz, who have been promised an entitlement to comparable options in respect of the shares of Timestrip in return for their contribution to Timestrip and that have agreed to accept these `C'Warrants of IMM in substitution for their entitlement in relation to Timestrip. Further, on completion of the Acquisition, IMM will issue `D'Warrants which entitle the holders to subscribe for a total of 4,000,000 Ordinary Shares at an issue price of 4p per share exercisable within two years after the date of issue. These warrants will be issued to Mr Spencer Leslie, one of the Vendors and Proposed Directors, in recognition for his contribution to Timestrip. Under a Deed of Warranties and Indemnity, the Proposed Directors have entered into warranties and indemnities in respect of Timestrip subject to limitations on their liability. The Proposed Directors have also entered into restrictive covenants. PROPOSED NAME CHANGE The Directors have decided to change the name of the Company to `Timestrip plc' to reflect more closely the Enlarged Group's operations. The change of name is subject to shareholder approval, which will be sought at the EGM. Timestrip will change its name to "Timestrip UK Limited" at the same time. DIRECTORS OF THE COMPANY ON COMPLETION On Completion of the Acquisition, Leo Knifton and Nigel Weller will resign from office as directors of IMM and the Proposed Directors, being Paul Freedman, Reuben Isbitsky and Spencer Leslie, will be appointed to the Board. Directors Stephen Oakes, (aged 49) Chairman Stephen Oakes has over 30 years experience in financial markets and is a Fellow of the Securities Institute. He began his career with stockbrokers Vickers da Costa Ltd, becoming a Member of the Stock Exchange in 1984. In 1985 he joined James Capel & Co (now HSBC Investment Bank plc) as a portfolio manager. Increasing management responsibility culminated in the position of Chief Executive Officer, HSBC Investment Management, firstly in respect of the international business and subsequently as acting CEO of the combined UK and international operations. He left HSBC in December 2002 and in October 2003 joined Alfred Henry Corporate Finance Limited to work with an established team specialising in advisory services to small listed businesses. He is a director of SBS Group Plc, Alltrue Investments plc, Beaufort International Group plc and Pountney PLC. Paul Freedman (aged 37) Co-Founder and Joint Chief Executive Paul Freedman graduated from Manchester University in 1990 with a BA (joint Hons) in Accounting and Law. Paul joined Citibank on their Graduate Training Scheme where he worked in Corporate Finance before leaving in late 1991 to join his family's textile business, Carfax Gowns Limited. Paul was responsible for sales to leading clothing retailers in the UK as well as general management. Having participated in a large scale reorganisation of Carfax's manufacturing sites and assisted in the broadening of its base, Paul left Carfax in 2000 in order to establish Timestrip, a new venture with the aim of creating a low cost expiry date label. Since inception Paul has shared responsibility for general management, commercial strategy and in particular Timestrip's valuation and funding requirements. Reuben Isbitsky (aged 36) Co-Founder and Joint Chief Executive Reuben Isbitsky studied at York University, Toronto, Canada. In 1991, before graduating he joined Brita Canada, a high growth consumer products company as Product Manager where he was responsible for the implementation of new product development. In 1996, he was appointed International Product Manager for Brita and relocated to Germany, being responsible for product marketing and development. And subsequently, for two years from the end of 1997, he worked as Project Manager for Sodaclub International BV (United Kingdom), a company which developed a high-tech. product where he worked on business and technical development, and co-ordinated a project team of 20 co-workers in a worldwide network of offices. Reuben left Sodaclub in 2000 in order to establish Timestrip with Paul Freedman, where his major responsibilities are marketing and sales, product development and general management. Spencer Leslie (aged 38) Non-Executive Director Spencer Leslie qualified as a Chartered Accountant before joining Lehman Brothers Investment Bank as a Private Client Investment Manager. In 1991 Spencer took the position of Finance Director at Supercuts Holdings Limited, a start-up business modelled on a niche market US concept. In his role as Managing Director from 1994, Spencer grew the business into a chain of 70 hair salons in shopping centres across the UK, before selling the business to its US namesake in 1999. Spencer is now actively involved in a number of businesses in the field of property investment and development and has made private investments and holds non-executive directorships in Timestrip, Topsy Turvy World Holdings Limited (children's play centres) and Mykindaplace Limited (online publishing). Spencer became a non-executive director of Timestrip on 23 February 2004 and Spencer has not previously been remunerated for his role as nonexecutive director of Timestrip. THE PLACING The Company has agreed with Falcon conditionally to place a minimum of 37,500,000, and a maximum of 75,000,000 new Ordinary Shares representing approximately 16.1 per cent. and 27.8 per cent. respectively of the Enlarged Ordinary Share Capital before the exercise of any Warrants. Placees who subscribe for New Ordinary Shares will be issued with one Placing Warrant for every three new Ordinary Shares issued to them under the Placing. Each Warrant will entitle the holder to subscribe for one Ordinary Share at the price of 6p during the period of 18 months commencing on Admission subject to a expiry notice provision. The New Ordinary Shares and Ordinary Shares issued on the exercise of the Placing Warrants will, following allotment, rank pari passu in all respects with the Existing Ordinary Shares and will have the right to receive all dividends and other distributions thereafter declared, made or paid in respect of the issued ordinary share capital of the Company. The net proceeds of the Placing will be used for the working capital requirements of the Group, including the repayment of any funding in addition to the balance due to Profile for the purchase of the intellectual property rights as referred to above. ADMISSION TO AIM AND DEALINGS The proposed Acquisition will constitute a "reverse take-over" under the AIM Rules and is therefore dependent upon the approval of shareholders being given at the Extraordinary General Meeting to be confirmed. Application has been made for the Existing Ordinary Shares and the New Ordinary Shares to be admitted to trading on AIM and it is anticipated that Admission will become effective and that trading in the Ordinary Shares on AIM will commence on the trading day following the EGM. The circular comprising an Admission Document in respect of the Acquisition will be posted as soon as practicable and will be subject to prior approval by the Panel on Takeovers and Mergers. Pending the publication of the circular, trading in the Company's Existing Shares will be suspended on AIM in accordance with the AIM Rules. For further information: Paul Freedman, Joint CEO and founding Director, Timestrip 07786 391868 Stephen Oakes, Falcon Securities 07867 528108 Shane Dolan, Biddicks 07947 118383 Roland Cornish, Beaumont Cornish Limited 020 7628 3396 END

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