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 Euro19,000 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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