PHRM.L Regulatory News (PHRM)

4 November 2011

Phorm Inc

("Phorm" or the "Company")

Expansion of Equity Placing to £33.6m

Issuance of Call Notices for existing £16.075m Convertible Loan Notes

Phorm (AIM: PHRM and PHRX), the internet personalization technology company, is pleased to announce an expansion of the £30.0m equity placing with institutional and other investors announced on 21 October 2011 to a total of £33.6m (the "Placing").

The proceeds from the Placing will be used to redeem the convertible loan notes ("CLNs") issued on 21 March 2011 (together with the Placing, the "Transaction") and to provide sufficient working capital to get to positive operational cash flow and develop the opportunities previously described.

The Company announces that call notices to all holders of the £16,075,000 CLNs will be served today. The CLNs will be redeemed on 11 November 2011 using a combination of cash and shares. The total cash repayable is £17.6m, being the £16.1m principal together with £1.5m of coupon (accrued at a rate of 15% per annum since the issue date of the CLNs). In addition, the Company must provide investors with a minimum threshold return of 1.1 times the principal (a nominal total of £17.7m) (the "Redemption Premium") as the CLNs are being redeemed in the first year of issue. Phorm has opted to satisfy the balance of the Redemption Premium Return in Shares. The Redemption Premium Shares are to be issued at a price of 98.30p per Share, being the average of the lowest five daily closing prices over the 20 day trading period immediately prior to the redemption notice being given. The total number of Redemption Premium Shares to be issued will be 17,988,302.

The total number of Shares that will be issued pursuant to the Placing will be 39,023,306 at a Placing price per Share of 86.10p. Accordingly, the total number of Shares to be issued by the Company pursuant to the Transaction is 57,011,608.

Application has been made for the Transaction Shares to be admitted to trading on the AIM Market of the London Stock Exchange Plc ("AIM") and trading of the Placing Shares and Redemption Premium Shares is expected to commence at 8.00 am on 10th and 11th November 2011 respectively.

Following the Transaction, the total issued share capital of the Company will comprise 75,491,515 Shares with a nominal value of $0.001 each, with each Share conveying the right to one vote of which 74,654,564 are trading on AIM under the ticker PHRM, the Reg S line and 836,951 are trading on AIM under the ticker PHRX, the unrestricted line. Phorm holds 45,000 PHRM shares in treasury.

 The Company's net proceeds (before expenses) from the Transaction (being the proceeds of the Placing less the cash amounts repayable upon redemption of the CLNs) will be approximately £16.0m.

Related Party Transaction

Mark Schneider, a non-executive director of the Company, has transferred £0.5m of his original £1.6m commitment in the Placing to Global Family Partners Ltd., which remains on the same terms and conditions as the other investors and previously announced. As Mr Schneider is a director, this constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules and the directors of Phorm, other than Mr Schneider, consider, having consulted with Canaccord Genuity Limited (the Company's nominated advisor), that the terms of these transactions are fair and reasonable insofar as the Company's shareholders are concerned.

Enquiries:

Phorm, Inc

Andy Croxson (analysts & investors) +44 20 7297 2326

Alex Laity (media) +44 20 7297 2710

Brokers

Canaccord Genuity Limited +44 20 7050 6500

(Nominated Adviser)

Andrew Chubb

Mirabaud Securities LLP +44 20 321 2508

(Joint Broker)

Peter Krens

Evolution Securities Limited +44 20 7071 4300

(Joint Broker)

Stuart Andrews

About Phorm:

Phorm is a global personalisation technology company that makes content and advertising more relevant to the consumer. Phorm's innovative platform preserves user privacy and delivers a more interesting online experience.

Phorm's partners include leading Internet Service Providers (ISPs), Publishers, Ad Networks and Advertisers.

Phorm is a Delaware, US incorporated company, with offices in Bucharest, Seoul, Sao Paolo and London.

The Company was admitted to the AIM market of the London Stock Exchange in 2004 and has over 140 employees and contractors.

For more information, please visit: www.phorm.com