Issue of Equity

Image Scan Holdings PLC
01 October 2003

Image Scan Holdings plc ('Image Scan' or the 'Company')
1 October 2003

ISSUE OF EQUITY

Image Scan today announces a proposed placing (the 'Placing') by Durlacher
Limited ('Durlacher') of up to 4,500,000 Ordinary Shares at a placing price of
35 pence per Ordinary Share to raise up to £1.575 million before expenses.

Commenting on the placing, Nick Fox, Chief Executive said:

'I am delighted that investors have responded so positively to the Placing.
Image Scan is at an exciting period in its development and these additional
funds will allow us to push the commercialisation of our innovative products and
take the Company forward to the next stage in its evolution.'

Reasons for the Placing

The Placing proceeds will be used to provide additional funds to further develop
the Company's business and, in particular, to provide sufficient working capital
to enable the Company within a 12 month timeframe to:

•         Establish an infrastructure to manage delivery of the Company's
          current and future strategic agreements in the aviation security 
          sector

•         Create a focused marketing function within the Company to specifically
          address:

              o   Development of sales for security equipment into non-aviation 
                  security markets
              o   Establish key industrial reference sites for DEX, VIXion and 
                  AXIS-3D(R) products

•         Accelerate on-going enhancements to the Company's IP portfolio

Further information on the Company's progress to date is set out below and also
in the Chairman's statement contained in the unaudited interim results for the
six month period ended 31st March 2003 announced on the 4th June 2003 and posted
to shareholders on 11th June 2003. Copies of the unaudited interim results are
available from the Company's offices at Pera Innovation Park, Melton Mowbray,
Leicestershire, LE13 0PB.

Reasons for disapplying pre-emption rights

The Directors have elected not to make the Placing available to existing
shareholders on a pre-emptive basis as they believe that the Placing will
represent an opportunity for the Company to broaden and institutionalise its
shareholder base and therefore, potentially, to increase the liquidity of the
Company's shares and its public profile.

Placing Arrangements

The Company has entered into a placing agreement with Durlacher under which
Durlacher has agreed to conditionally place the placing shares with selected
institutional clients of Durlacher and other investors.  The placing agreement
is conditional, inter alia, on the Resolution being passed at the EGM and on
admission to trading on AIM of the placing shares.

Recent developments / current trading

There have been a number of changes to the Group's operating and trading
position since it published unaudited interim results for the six months ended
31st March 2003, principally these are:

SECURITY



•         The BAA and Department for Transport sponsored trial at Heathrow
Terminal 1 has taken longer than originally anticipated. Whilst initial feedback
has been positive, in the last six months the standard AXIS-3D(R) machine has
been improved and upgraded from the unit supplied to BAA for the trial.
Consequently it has been agreed that to provide a more appropriate and
meaningful technical evaluation, in the near future a focused trial using a
production version of the AXIS-3D(R) machine will be conducted at a designated
airport.



•         Over the last six months we have completed product engineering of the
3DX-CameraTM for incorporation in the AXIS-3D(R) unit. The system has passed
relevant regulatory compliance tests and is now ready for market launch. In
conjunction with Rapiscan, the product's formal introduction to the market will
be at the aviation security's premier annual event, AvSec, to be held on
18th-20th November in Athens. In addition, Rapiscan have commissioned two
further AXIS-3D(R) units for promotion in the Middle East and Australasia. The
Board believes that Rapiscan is expecting this effort to translate into orders
by the half year.



•         Following pre-launch marketing, the first commercial sales of the
AXIS-3D(R) product have been closed by our alliance partner Rapiscan to their
agents in the CIS and Romania. Both units are undergoing brief customer
evaluation before confirmation of ongoing orders. These sales have established a
benchmark market price for the machine that provides us with a satisfactory
margin. In addition the product has been sold and installed in a vehicle for use
by the UK's Police Scientific Detection Branch ('PSDB'). The PSDB is pleased
with the product and is currently using it to screen articles being taken into
party political conferences. The intention is for Rapiscan to promote this
product to the security sector worldwide.



•         We have reported previously that the development of the EU version of
3D threat image projection ('3DTIP') was being developed with a view for
introduction in Europe. This project is continuing and expected to be ready for
EU type approval by the end of this calendar year. We expect a successful
outcome in the New Year which will ensure that the AXIS-3D(R) product will be
TIP compliant comfortably in advance of anticipated EU and USA mandatory
compliance.



•         In respect of non-aviation security, we are in discussion with a
leading UK corporation to provide 3D screening capability as part of its
security cover for its Head Office. This is expected to create a high-profile
reference site for on-going promotion of our technology in the corporate sector.
This we see as a very relevant market for our screening product, especially
where operatives are often subject to less formal training and less constant
exposure than in the aviation security sector.



INDUSTRIAL



•         The industrial product DEXTM will be officially launched at the VISION
2003 exhibition in Stuttgart on 21st-23rd October. Market reaction and feedback
to this innovative product will allow us to focus on the final product offering
and establish key reference sites. We expect a positive response given the
excellent reaction to test marketing of the system capability to potential
users.



•         We are discussing the use of our proven AXIS-3D(R) technology with a
number of potential commercial customers. The aim is to establish two or three
key reference sites, which we will service and maintain to allow promotion of
the concept. Following establishment of these, we will source and appoint
appropriate sales agents in the UK and overseas.



I am delighted to also announce that, subject to the Placing becoming
unconditional and the successful Admission of the Placing Shares, it is proposed
that Ray Gibbs will take up a full time position in a dual role of Finance
Director and Chief Operating Officer. Ray would be working closely with Nick Fox
to develop and grow our Security and Industrial markets now we have established
credible, cost effective products for both sectors.



It is intended that subject to the successful Admission of the Placing Shares
the Board of Image Scan will grant options to Ray Gibbs under the Image Scan
Enterprise Management Incentives Share Option Plan, in recognition of his
efforts in regard to the Placing and other work over the past six months.



Although the sales and orders in the second half of the year have been
disappointing, our indicative quotations to Rapiscan are continuing to grow and
we anticipate them translating into sales in the forthcoming year. The
strengthening of the management team is especially welcome as the sales
prospects for the next twelve months look promising and the commercialisation of
the core products starts in earnest.

Extraordinary General Meeting

Set out at the end of the shareholder circular document is a notice convening
the EGM to be held at the offices of Stallard Solicitors, Centurion House, 37
Jewry Street, London EC3N 2ER at 10.00 a.m. on 29th October 2003. At the meeting
the following resolution will be proposed, which can be summarised as follows:



         i)            to increase the authorised share capital by the creation
of an additional 4,500,000 new ordinary shares of 1p each;

       ii)            without prejudice to all subsisting authorities, to
authorise the directors to allot relevant securities up to the aggregate nominal
amount of £42,000; and

      iii)            without prejudice to all subsisting authorities, to
empower the directors to allot equity securities for cash pursuant to the
authority given in the previous resolution as if section 89(1) of the Act (which
relates to the pre-emption rights of existing shareholders) did not apply to the
allotment.

The Resolution is necessary to allow the Placing to be completed.

Recommendation

The Directors, who have been so advised by Durlacher, believe that the proposed
Placing is in the best interests of the Company and its Shareholders as a whole.
In providing advice to the Directors, Durlacher has taken into account the
Directors' commercial assessment of the business and prospects of the Company.

Accordingly, the Directors unanimously recommend that you vote in favour of the
Resolution as they have undertaken to do so in respect of their own beneficial
holdings amounting in aggregate to 2,332,335 Ordinary Shares representing
approximately 14.4 per cent. of the Company's current issued share capital.


ENQUIRIES:

Image Scan                                                      01664 503 600
Nick Fox, Chief Executive
Ray Gibbs, Finance Director


Durlacher Ltd                                                   020 7459 3600
Grant Harrison
Jonathan Retter


Buchanan Communications Ltd                                     020 7466 5000
Richard Darby




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