YGEN.L Regulatory News (YGEN)

27 Sep 2006 10:30

Original Investments PLC27 September 2006 ORIGINAL INVESTMENTS PLC ("THE COMPANY" OR "ORIGINAL INVESMTENTS") PROPOSED ACQUISITION OF VIALOGY CORP. INC. PROPOSED CHANGE OF NAME TO VIALOGY PLC NOTICE OF ANNUAL GENERAL MEETING AND ADMISSION OF ENLARGED ISSUED SHARE CAPITAL TO TRADING ON AIM KEY HIGHLIGHTS: • Acquisition of the issued share capital of ViaLogy not already owned by Original Investments;• Values the fully diluted share capital of ViaLogy at approximately £8.05 million;• ViaLogy's technology has been developed to the point where it has the potential to produce improved performance in a variety of diverse applications;• Contracts have already been signed with a number of substantial clients such as Cisco Systems and Boeing Corporation and advanced discussions are being held with others; and• Change of name to ViaLogy plc ENQUIRIES: Terry Bond, Managing Director and Deputy +44 (0)78 6084 2756ChairmanOriginal Investments plc Michael Kelly, CEO +1 (626) 296-6330.ViaLogy Mark Percy, Seymour Pierce +44 (0)207 107 8000Liam O 'Donoghue INTRODUCTION Your Board is pleased to announce that subject to Shareholder approval, termshave been agreed by the Company for the acquisition of the issued share capitalof ViaLogy not already owned by Original Investments by means of the merger ofViaLogy and Original Investments LLC, the Company's wholly-owned subsidiary. Atpresent, the Company owns, on a fully diluted basis, 43.76 per cent. of theshare capital of ViaLogy. The consideration for the Acquisition is to besatisfied by the issue of 3.08 Ordinary Shares for every ViaLogy Common Share inissue at Completion, valuing the Existing ViaLogy Shares not already owned bythe Company at approximately £3.7 million, all of the Existing ViaLogy Shares(including those owned by the Company) at approximately £7.21 million, and thefully diluted share capital of ViaLogy at approximately £8.05 million (in allcases based on the average closing mid-market price of an Ordinary Share in theperiod from 1 June to 31 August 2006 (inclusive) of 4p per Ordinary Share). The Acquisition is a reverse takeover under the AIM Rules and, as such, requiresthe consent of the Shareholders which is to be sought at the AGM of the Companyconvened for 26 October 2006 at 10.00 am. In addition, Dr. John Broome, whountil 6 September 2006 was a director of the Company, is a shareholder ofViaLogy and therefore the Acquisition is also a related party transaction underthe AIM Rules. The Acquisition is conditional, inter alia, on the Resolutions numbered 3 to 7(inclusive) in the notice convening the AGM being passed and Admission. Assumingsuch Resolutions are passed at the AGM, it is expected that the Acquisition willbe completed on 27 October 2006 and that the Enlarged Issued Share Capital willbe admitted to trading on AIM on 30 October 2006. Further information regarding the terms and conditions of the Acquisition is setout below and in the admission document being sent to shareholders today. INFORMATION ON ORIGINAL INVESTMENTS Original Investments (previously BioProjects International PLC) was founded inApril 2000 with the stated objective of providing development capital andcommercial and strategic advice to early-stage biotechnology andbiotechnology-related companies. The Company was admitted to AIM in May 2002 andat that time raised further funding of £4.6 million before expenses by way of aplacing of Ordinary Shares. At the time of its flotation on AIM, the Company had investments in eightbusinesses. Of these, one investment, Acolyte BioMedica, was sold at a profitand a further five investments were each disposed of at a loss. OriginalInvestments now has equity holdings in two companies - ViaLogy and Acrobot. ViaLogy develops and markets services and software solutions forsignal-processing for high technology industries. Acrobot is a spin-out companyfrom Imperial College London, which develops precision surgical systems forminimally invasive, bone conserving orthopaedic surgery. Original Investments has invested, in aggregate, £604,500 for a 22.5 per cent.holding in Acrobot and a total of £5.05 million for a 43.76 per cent. holding(fully diluted) in ViaLogy. The Company had net assets of £7.6 million as at 31March 2006, including cash of £2.8 million. INFORMATION ON VIALOGY ViaLogy was founded in 1999 by a group of senior scientists and managers insupercomputing and ultra-computing technologies at the Caltech/NASA JetPropulsion Laboratory (JPL) in Pasadena, California. Leveraging their priorexpertise and work at JPL in remote sensing and signal processing, ViaLogyscientists developed a technology to separate the background 'noise' thatenvelops weak signals called Quantum Resonance Interferometry (QRI), which hasthe potential to be adapted to a wide range of measurement, instrumentation andother applications. The initial test results on QRI, undertaken in the microarray industry,indicated that the technology was able to detect and discriminate signals withan intensity 1,000 times lower than RMS (root mean square) background noise. Thetechnology was the subject of further development work undertaken in the massspectrometry industry. Other development activities were carried out in theareas of sensor data processing and transference. The board and management team of ViaLogy consider that the technology issufficiently advanced to be of considerable benefit in a number of industrialareas and a planned programme of commercialisation has commenced. Discussions atboth development and commercial levels are being held with a number ofinternational companies and national authorities to verify the suitability ofincorporating the ViaLogy technology into existing and/or new products. THE OPPORTUNITY The directors of Original Investments believe this is the right time to mergethe Company with ViaLogy. The key factors are: • ViaLogy's technology has been developed to the point where it has the potential to produce improved performance in a variety of diverse applications;• After several years of concentrated development work, ViaLogy is in the early stages of commercialising its technology;• A management team is in place to exploit the opportunities presented by the technology;• Contracts have already been signed with a number of substantial clients and advanced discussions are being held with others; and• The merger provides an early opportunity to benefit from the significant potential upside in ViaLogy. There are sufficient funds in place to provide working capital for ViaLogy'spresent activities and, as and when necessary, the Directors and ProposedDirectors believe that the Company's AIM quote will enable the Company to raisefurther capital for expansion. TECHNOLOGY APPLICATIONS The Directors and Proposed Directors believe that ViaLogy's technology has thepotential to be applied in the following applications: Sensor Interoperability The inability of users such as those in the emergency services with disparatedevices or on separate networks to communicate with each other can havepotentially serious consequences, hence the need for true communicationsinteroperability. ViaLogy's technology has now been incorporated in aninteroperability and collaboration system which enables information to bedelivered with disparate devices across separate networks. ViaLogy's associatein this product is Cisco Systems. Border Security International border security is a priority with most of the world'sgovernments. In the United States particularly, the situation is acute, with aCanadian border 8,893 kilometers long (including 2,477 kilometers with Alaska)and a southern border, separating the United States and Mexico, measuring 3,141kilometers. The United States monitors these vast borders using radar, visibleand infrared cameras, as well as other ground and airborne sensors. ViaLogybelieves that it is important that the information produced by these modernsurveillance techniques is accurately transmitted, integrated and analysed. There are plans to incorporate ViaLogy technology in a product that is beingdeveloped to achieve this goal. Missile Seeking Accuracy Under a contract with Boeing Phantom Works, ViaLogy is to develop anddemonstrate a proof-of concept silicon electronic eye based on bionic principlesthat replicate the optical movements of certain insects and reptiles. Thepurpose of the demonstrator will be to produce the next generation of low-powervisual systems for autonomous missile interceptors in surveillance UAVs(unmanned aerial vehicles) and SRVs (subterranean search and rescue crawlervehicles). Foodborne Diseases The United States Centre for Disease Control, together with the US Department ofAgriculture and the Food and Drug Administration, has set up The FoodborneDiseases Active Surveillance Network (FoodNet). The objectives of FoodNet are to: • Determine the burden of foodborne illness in the United States;• Monitor trends in specific illnesses;• Attribute illnesses to specific foods and settings; and• Develop and assess intervention methods to combat foodborne illness. ViaLogy is collaborating with other organisations to produce a hierarchicalsystem for analysing the relevant information, providing alerts anddisseminating such information to the appropriate authorities. Water Contamination The United States Homeland Security Presidential Directive 9 instructs theEnvironmental Protection Agency (EPA) to develop a robust, comprehensive andfully co-ordinated surveillance and monitoring system to provide early detectionof water contamination. The EPA is establishing partnerships with nationwidelaboratory networks to integrate existing federal and state laboratoryresources. ViaLogy believes there is an opportunity to work with potentialpartners to provide bio-contamination warning sensors for event detection,credibility determination and remediation and recovery activities. Avian-Borne Influenza ViaLogy intends to work with international partners who are developingbiosurveillance and tracking systems which will enable nations to receive earlywarning of the disease and take steps to contain its spread and effects.ViaLogy's role is to provide integration and interoperability for a range ofbiosensors which will govern worldwide communication of information. Oil Exploration and Development The relatively high current price of oil and the development of enhanceddrilling equipment creates an opportunity to exploit previously abandoned wells.Evolution Petroleum Corporation (''Evolution Petroleum''), based in Texas, hascommissioned ViaLogy to use ViaLogy's QRI techniques to ascertain the extent anddensity of oil deposits available on specific sites in the United States, basedon data supplied by Evolution Petroleum. Results are due to be delivered byViaLogy in December 2006. Oil Rig Monitoring Oil rig platforms are protected by chemical sensing systems to detect theexistence of ambient combustible gases, carbon-dioxide and hydrogen sulphide,and other hazardous gases. In addition, in the event of an oil fire acombination of chemical sensors and video monitoring may be used to track theprogression of the fire and aids fire fighting. ViaLogy is working with awell-known international corporate partner to integrate chemical sensors andcameras, to provide timely alerts and disseminate information. Other Applications There are several other examples of ViaLogy technology applications whichfeature in ViaLogy's future business plan and are being discussed with potentialpartners. Face recognition, and restoration for instance, is an area in whichViaLogy has been asked to develop a product. In the medium term, ViaLogy alsoplans to complete its QRI program for the mass spectrometry industry. EXISTING CONTRACTS ViaLogy has entered into the following contracts to develop the technologyfurther for use in applications in three separate industrial sectors: • A development and production contract with Cisco Systemsrelating to inter-computer communication. The ViaLogy software was successfullydelivered by ViaLogy to Cisco Systems on 30 August 2006, a key milestone underthe contract. The contract provides for a royalty to be paid by Cisco Systems toViaLogy on all products sold which incorporate ViaLogy technology; • A development contract, relating to electronic vision forunmanned aerial aircraft and missile seekers, with Boeing Corporation to improvesensitivity and speed of response; and • A Texas-based oil and gas exploration company, EvolutionPetroleum, has retained ViaLogy to develop software to assist the accurateanalysis of underground strata. PATENTS ViaLogy has been granted a total of 11 US patents and 3 European patents inrespect of certain elements of its technology. Each of the European patents hasbeen validated in each of Switzerland, France, Germany and the UnitedKingdom. ViaLogy has made applications for the grant of a further 4 USpatents, 5 European patents, 2 Indian patents and 1 Chinese patent and inaddition has filed 1 PCT application. ViaLogy's research and development workcontinues to be supported by strategic patent filings based upon assessments ofthe potential to exploit its technology commercially. ViaLogy's rights under thepatents and patent applications, together with its other intellectual propertyrights, are the rights exploited in the development agreements referred to inthe section headed Existing Contracts. CURRENT TRADING AND PROSPECTS OF THE ENLARGED GROUP The audited accounts of ViaLogy for the year ended 31 December 2005 show a lossbefore taxation of $2,510,098 from turnover of $56,500. The audited accounts ofOriginal Investments for the year ended 30 March 2006, and announced thismorning, show a loss before taxation of £71,445 from turnover of £6,852. The Enlarged Group will focus on the commercialisation of ViaLogy's technologywhich the Directors and Proposed Directors believe will assist the EnlargedGroup to widen its customer base and generate sales. Key contracts have recentlybeen signed with large multinationals such as Cisco Systems and BoeingCorporation. The Directors and Proposed Directors believe that these contractsrepresent an important development for the Enlarged Group, as they demonstratethe attractiveness of ViaLogy's technology and also ViaLogy's ability to wincontracts with large multinational corporations. The Directors and Proposed Directors believe that ViaLogy offers exciting growthprospects which could generate opportunities for shareholder return over themedium to long term. DIRECTORS AND SENIOR MANAGEMENT Dr. Richard Dixey retires by rotation at the Annual General Meeting. Dr. Dixeyis not seeking reelection as he had agreed to resign upon completion of theAcquisition. At Completion, it is proposed that Julian Viggars and Jim Slaterwill step down from the board of directors of Original Investments. It isproposed that with effect from Admission, Terry Bond will be appointed ExecutiveChairman and that Dr. Sandeep Gulati and Michael Kelly will be appointed to theBoard as Technical Director and Chief Executive respectively and that GeorgeRehm and Robert Dean will be appointed as Non-Executive Directors. Thebiographical details of the Proposed Directors and senior management of theCompany are set out below: Proposed Directors Michael Woods Kelly, aged 62, Proposed Chief Executive Officer Michael Kelly has worked for over 30 years in a senior capacity in internationalfinance (banking, corporate finance, privatization, and venture capital) in theU.S., Europe, and Asia. He has founded and restructured companies in Europe andthe US and was responsible for investment banking activities for the Bank ofAmerica, managed a US branch of Commerzbank and a German branch of Deutsche Bankin Germany, and was CEO of American Express Bank in Germany. He was also aprivatization consultant for KPMG in Estonia and served as a consultant ininvestment banking to the Asian Development Bank in Beijing, China. From January2000 until becoming CEO of ViaLogy, Mr. Kelly was a Managing Partner offirstVentury GmbH (''firstVentury''), a German based venture capital companywhere he remains a partner. Dr. Sandeep Gulati, aged 42, Proposed Chief Technical Officer Dr. Sandeep Gulati is a co-founder, Chief Science Officer and VP, ProductDevelopment for ViaLogy Corp. Previously, he headed the UltracomputingTechnologies Group at NASA's Jet Propulsion Lab (''JPL'') in Pasadena, CA.During his 12 year tenure at JPL, he led computational advances in spacecraftautonomy, autonomous diagnostics and prognostics of complex systems, sensorfusion, neural networks, signal processing, command decision modelling andintelligence analysis. At JPL he was a Principal Scientist on a number ofprograms such as the Department of Defences's Joint Strike Fighter, NASA'sReusable Launch Vehicle and the oil industry's DEEPLOOK Consortium. He has alsocollaborated on strategic programs with Lockheed Martin, Boeing, NorthropGrumman, McDonnell Douglas, Rockwell, Pratt & Whitney, and NASA Center. AtViaLogy, he developed a novel signal amplification computational technology,Quantum Resonance Interferometry (''QRI'') to detect and quantitative weaksignals and events in high clutter and background noise. George Rehm, aged 58, Proposed Non-Executive Director George Rehm has been a non-executive director of the ViaLogy since 2003,representing a significant shareholder, firstVentury, of which he is managingdirector. He has been a practicing lawyer for over 30 years and has experiencein international licensing, technology transfer, investment and privatizationtransactions, involving the US, Europe and Asia. He has completed over thirtyinternational technology transfer transactions, including deals for Nutrasweet,Applied Materials, McDonnell-Douglas, Monsanto, Spectra Physics, Dow Corning,Mitsubishi Heavy Metals and Daewoo Electronics. For eight years Mr Rehm was apartner in an international law practice focusing on privatization andinvestment transactions in Eastern Germany, the Czech Republic and the formerUSSR. He also served as counsel on foreign trade and European Investment tomajor US electronics industry associations and as an advisor to US presidentialcandidates on international trade and investment policy. Dr. Robert William Dean, aged 64, Proposed Non-Executive Director Robert Dean is Senior Vice President, Corporate Market Development, with ScienceApplications International Corporation Inc., the largest employee-owned researchand engineering company in the United States. Previously he has held seniorexecutive positions in the aerospace industry at Boeing Corporation, LockheedMartin, and Ball Aerospace Corporation. Mr Dean also served in senior executivepositions in the US Government at the Central Intelligence Agency, the StateDepartment, and at the White House as Special Assistant to the President duringRonald Reagan's presidency. He has been on the ViaLogy Science Advisory Boardsince February 2006. Senior Management Mark Kingsley Collingbourne, aged 40, Chief Finance Officer Mark Collingbourne is a Chartered Certified Accountant. He previously spent nineyears as Finance Director of Curtis Brown Group, a leading UK literary, mediaand talent agency. He also spent five years as finance manager at MCPS, acompany which manages the collection and distribution of Mechanical MusicRoyalties for copyright owners. He is also currently Financial Controller andcompany secretary of a number of other companies controlled by Jim Slater,current Chairman of Original Investments. PRINCIPAL TERMS OF THE ACQUISITION Original Investments has conditionally agreed to acquire the entire sharecapital of ViaLogy not already owned by the Company by means of the merger ofViaLogy into Original Investments LLC, the Company's wholly-owned subsidiary.The consideration for the Acquisition is to be satisfied by the issue to theViaLogy Shareholders (other than the Company) of 3.08 Ordinary Shares for everyViaLogy Common Share held at Completion, valuing the Existing ViaLogy Shares notalready owned by the Company at approximately £3.7 million, all of the ExistingViaLogy Shares (including those owned by the Company) at approximately £7.24million, and the fully diluted share capital of ViaLogy at approximately £8.05million (in all cases based on the average closing mid-market price of anOrdinary Share in the period from 1 June to 31 August 2006 (inclusive) of 4p perOrdinary Share). Each ViaLogy Shareholder's entitlement to Ordinary Shares willbe rounded up to the nearest whole number of Ordinary Shares. ViaLogy currentlyhas in issue 10,855,921 ViaLogy Common Shares and the ViaLogy Preferred Shareswhich prior to Completion will be converted into 27,477,442 ViaLogy CommonShares. In addition, prior to Completion the ViaLogy Convertible Loans will beconverted into 20,161,014 ViaLogy Common Shares. Assuming no exercise of any ofthe ViaLogy Options or ViaLogy Warrants prior to Completion, the issued sharecapital of ViaLogy at Completion will comprise 58,494,377 ViaLogy Common Sharesof which 28,613,142 will be owned by the Company and 29,881,235 will be owned bythe other ViaLogy Shareholders. On this basis it is expected that on Completionthe Company will issue 92,034,214 Ordinary Shares as consideration for theAcquisition, representing approximately 22.8 per cent. of the Enlarged IssuedShare Capital. The Acquisition is conditional, inter alia, on the approval of the holders of amajority of the ViaLogy Common Shares and approval of the holders of two thirdsof the ViaLogy Preferred Shares. The holders of a majority of the ViaLogy CommonShares and the holders of two thirds of the ViaLogy Preferred Shares haveundertaken to give such approvals. The Acquisition is also conditional upon thepassing of the Resolutions numbered 3 to 7 (inclusive) at the Annual GeneralMeeting. Further details of the Merger Agreement are set out in the admission document. VIALOGY OPTIONS AND WARRANTS ViaLogy has outstanding the ViaLogy Options granted under the ViaLogy ShareOption Plan over 6,498,962 ViaLogy Common Shares exercisable at prices between$0.05 and $0.258032 per ViaLogy Common Share. The ViaLogy Options areexercisable at any time up to ten years from the date of grant. The mostrecently granted of the ViaLogy Options will in expire in August 2016. TheMerger Agreement provides for the ViaLogy Options to be assumed by the Companyon the basis that they will be exercisable in respect of such number of OrdinaryShares as is calculated by multiplying the number of ViaLogy Common Shares thesubject of an option by 3.08 (rounded down to the nearestwhole number) at a price per Ordinary Share calculated as the sterlingequivalent of the current exercise price divided by 3.08 (subject to a minimumprice of £0.01 per Ordinary Share). If any ViaLogy Options are exercised priorto Completion the Company will issue Ordinary Shares to the holder of theViaLogy Common Shares issued upon exercise of the ViaLogy Option on the samebasis as the other ViaLogy Shareholders. In addition, to the ViaLogy Options,ViaLogy has outstanding the ViaLogy Warrants of which 193,775 are held by GeorgeRehm and 193,775 are held by Michael Kelly, each warrant entitling the holder tosubscribe for one ViaLogy Common Share at a price of US$0.258032 at any time upto 5 October 2010. The ViaLogy Warrants will be assumed by the Company pursuantto the Merger Agreement and will be exercisable in aggregate in respect of1,193,654 Ordinary Shares at a price of £0.04 per Ordinary Share at any time upto 2 October 2010. LOCK-IN AGREEMENTS On Admission, Terry Bond and the Proposed Directors will be interested in anaggregate of 27,829,329 Ordinary Shares, representing approximately 6.9 percent. of the Enlarged Issued Share Capital. Details of the Directors andProposed Directors holdings of Ordinary Shares are set out in the admissiondocument. In accordance with the AIM Rules, Terry Bond and the ProposedDirectors have undertaken to Seymour Pierce and the Company not to dispose ofany interest in Ordinary Shares (except in certain limited circumstances) for aperiod of 12 months from Admission and for a further 12 months thereafter tomake disposals of Ordinary Shares only through Seymour Pierce. Following Completion, Aeris Holding AG will be the holder of 60,883,923 OrdinaryShares, representing approximately 15.1 per cent. of the Enlarged Issued ShareCapital. In accordance with the AIM Rules, Aeris Holding AG has undertaken toSeymour Pierce and the Company not to dispose of any interest in Ordinary Shares(except in certain limited circumstances) for a period of 12 months fromAdmission and for a further 12 months thereafter to make disposals of OrdinaryShares only through Seymour Pierce. Julian Viggars and Jim Slater will resign as Directors on Completion. RichardDixey will not seek re-election at the Company AGM. Nonetheless, Jim Slater hasundertaken to Seymour Pierce and the Company that he will not dispose of myinterests in 19,485,000 Ordinary Shares for a period of 12 months fromAdmission. Jim Slater has an interest in 7,000,000 Ordinary Shares held by TheSlater Foundation, a registered charity, which is not subject to theundertaking. Further details of these lock-in arrangements are set out in theadmission document. SHARE OPTIONS At the time of its floatation on AIM the Company adopted the Share Option Plans.No option granted under the Share Option Plans remains exercisable. Conditional upon the passing of the Resolutions numbered 3 to 7 (inclusive) atthe Annual General Meeting and Admission, the Company has agreed to grantoptions in aggregate over 15,037,000 Ordinary Shares to the following,exercisable at 4 pence per Ordinary Share: Director/employee No. of Ordinary Shares Terry Bond 6,000,000Sandeep Gulati 7,230,000George Rehm 403,500Robert Dean 403,500Mark Collingbourne 1,000,000 The options will become exercisable in respect of one third of the OrdinaryShares over which they are granted on the first, second and third anniversariesof the date of Admission. An option will lapse to the extent that it has notbecome exercisable upon the cessation of employment or termination of office ofthe option holder, subject to the discretion of the Board to permit an optionholder to exercise the option following such cessation of office or employment. In order to provide an incentive to employees of the Enlarged Group in thefuture the Company intends to make further grants of options under the ShareOption Plans. CORPORATE GOVERNANCE AND BOARD PRACTICES The Directors and Proposed Directors recognise the importance of sound corporategovernance and will, in so far as is practicable given the Company's size andthe constitution of the Board, have regard to the main provisions of theCombined Code following Admission: Board Following Completion the Company will have 2 non-executive directors. The Boardis responsible for formulating, reviewing and approving the Enlarged Group'sstrategy, budgets and corporate actions. The Company intends to hold Boardmeetings at least 4 times each financial year and at other times as and whenrequired. Committees The Company has established audit and remuneration committees of the Board withformally delegated duties and responsibilities. Following Admission, the audit committee will comprise George Rehm and RobertDean (both Non Executive Directors) and will be chaired by George Rehm and willmeet at least twice a year. The audit committee will be responsible for ensuringthat the Enlarged Group's financial performance is properly monitored,controlled and reported. It will also meet the auditors and review reports fromthe auditors relating to accounts and internal control systems. The auditcommittee will meet at least once a year with the auditors. The remuneration committee will comprise George Rehm and Robert Dean (bothNon-Executive Directors) and will be chaired by Robert Dean and will set andreview the scale and structure of the executive directors' remunerationpackages, including share options and the terms of their service contracts. Theremuneration and the terms of appointment of the Non-executive directors will bedetermined by the Board with due regard to the interests of the Shareholders andthe performance of the Enlarged Group. The remuneration committee will also makerecommendations to the Board concerning the grant of share options to employees. In light of the size of the Board, the Directors do not consider it necessary toestablish a nominations committee; however, this will be kept under regularreview. The Company has adopted a model code for Directors' dealings which isappropriate for an AIM quoted company. The Directors and Proposed Directors willcomply with Rule 21 of the AIM Rules relating to Directors' dealings and willtake all reasonable steps to ensure compliance also by the Enlarged Group'sapplicable employees. DIVIDEND POLICY Initially, and in the medium term, the Directors' and Proposed Directors'intention is to re-invest funds into the Enlarged Group rather than makingpayments of dividends. Thereafter, the payment of dividends will be consideredsubject to the availability of distributable reserves, whilst maintaining anappropriate level of dividend cover and having regard to the need to retainsufficient funds to finance the development of the Enlarged Group's activities. ANNUAL GENERAL MEETING The Annual General Meeting of the Company is being convened for 10.00 a.m. on 26October 2006 at the offices of Faegre & Benson LLP, 7 Pilgrim Street, London,EC4V 6LB pursuant to the notice set out at the end of the admission document. Resolutions 1 and 2 deal with the ordinary business that normally takes place atthe AGM and require no explanation. Dr. Richard Dixey retires as a Director byrotation at the AGM and is not seeking re-election to the Board. The Resolutions3 to 7 are being proposed: 3. to approve the acquisition of ViaLogy on the terms set out in the MergerAgreement;4. to increase the authorised share capital of the Company from £5,000,000 to£7,500,000 by the creation of 250,000,000 new Ordinary Shares;5. to grant authorities to the Directors to allot relevant securities pursuantto section 80 of the Act up to a maximum nominal amount of £2,627,005,representing 262,700,500 Ordinary Shares, including for the purposes of theAcquisition;6. to disapply the statutory pre-emption rights under section 89 (1) of the Act,including for the purposes of the grant of options and warrants in connectionwith the Acquisition and the grant of options to the Directors, ProposedDirectors and employees as referred to above; and7. to change the name of the Company to ViaLogy plc. Following Admission the Board will be authorised to issue up to 134,418,812Ordinary Shares, representing approximately 33 per cent. of the Enlarged IssuedShare Capital, pro rata to Shareholders and otherwise than pro rata toShareholders for non-cash consideration. In addition, following Admission theBoard will be empowered to issue up to 60,488,465 Ordinary Shares, representingapproximately 15 per cent. of the Enlarged Issued Share Capital, for cashotherwise than pro rata to Shareholders. This power will lapse 15 months afterthe AGM or at the conclusion of the annual general meeting to be held in 2007,whichever occurs first. As the Acquisition constitutes a reverse takeover, Shareholder approval, asprovided for by Resolution 3, is required under the AIM Rules. RECOMMENDATION The Directors believe, having consulted with Seymour Pierce, that the terms ofthe Acquisition are fair and reasonable and that the Acquisition is in the bestinterests of the Company and its Shareholders as a whole. Accordingly, theDirectors recommend that Shareholders vote in favour of the Resolutions numbered3 to 7 to be proposed at the AGM, as they, and their immediate families andconnected persons, intend to do in respect of their own shareholdings, which inaggregate amount to approximately 14.6 per cent. of the issued share capital ofthe Company. AVAILABILITY OF ADMISSION DOCUMENT Copies of the admission document will be available to the public during normalbusiness hours at the offices of Seymour Pierce on any weekday (exceptSaturdays, Sundays and public holidays), free of charge, for at least one monthafter Admission. DEFINITIONS All definitions in this announcement are as set out in the admission documentdated 27 September 2006 which is being sent to shareholders today. ADDITIONAL DISCLOSURE The following Proposed Directors will be appointed to the board of the EnlargedGroup, conditional upon completion of the acquisition of ViaLogy. The Proposed Directors hold or have held over the previous five years the following directorships and partnerships; Current Past Michael Woods Kelly Concurro Inc.ViaLogy Corp. Aeris Holdings SAfirstVentury GmbH n4fx.com Inc. Dr Sandeep Gulati * ViaLogy Corp.Arroyo Sciences Inc.Zyomed Corp. ViaChange Inc. Viaspace Inc. George Rehm Affimed Therapeutics AG NoneSensovation AGBioPheresis Technologies IncViaLogy Corp.Aeris Technology Fund SARL Dr Robert William DeanNone EOS Ltd Macdonald, Dettweiller & Associates * Sandeep Gulati was a director of ViaChange Inc. which was placed undervoluntary general assignment for the benefit of creditors in December 2002. There are no additional disclosures outstanding in relation to the ProposedDirectors. ADMISSION TO AIM Application has been made for Admission of the Enlarged Issued Share Capital tothe AIM market of the London Stock Exchange. Dealings are expected to commenceon 30 October 2006. This information is provided by RNS The company news service from the London Stock Exchange