Notice of General Meeting

RNS Number : 8660G

In-Deed Online PLC

13 June 2013

 



THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Document, or the action you should take, you are recommended immediately to seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser authorised under the Financial Services and Markets Act 2000, as amended, if you are a resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser. This Document does not constitute any offer to issue or sell or a solicitation of any offer to subscribe for or buy Ordinary Shares.

Copies of this Document are either being sent to Shareholders or are available for inspection on the Company's website. If you have sold or otherwise transferred all of your Ordinary Shares please forward this Document and the accompanying Form of Proxy at once to the purchaser or transferee or to the stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If you have sold or transferred part only of your holding in Ordinary Shares you should retain this Document and consult the stockbroker, bank or other agent through whom the sale or transfer was effected.

The distribution of this Document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this Document comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Your attention, in particular, is drawn to Part II of this Document which sets out and describes certain risk factors that you should consider carefully when deciding whether or not to vote in favour of the Resolutions proposed at the General Meeting. The whole of this Document should be read in the light of these risk factors.

IN-DEED ONLINE plc (Incorporated and registered in England and Wales under the Companies Act 2006 with the registered number 7176993) Proposed disposal of Xanther Limited and the Company's intellectual property rights Proposed adoption of an Investing Policy Notice of General Meeting

Your attention is drawn to the letter from the Chairman of the Company, which is set out in Part I of this Document, recommending you vote in favour of the Resolutions to be proposed at the General Meeting.

Notice of a General Meeting to be held at 11.00 a.m. at DWF LLP, Capital House, 85 King William Street, London, EC4N 7BL on 2 July 2013 is set out at the end of this Document. A Form of Proxy for holders of Ordinary Shares for use at the General Meeting accompanies this Document and, to be valid, must be completed and returned to the Company's registrars, Computershare Investor Services plc, The Pavilions, Bridgewater Road, Bristol, BS13 8AE, as soon as possible but in any event received not later than 11.00 a.m. on 28 June 2013 or 48 hours before any adjourned meeting.

A summary of the action to be taken by Shareholders is set out on page 10 of this Document and in the General Meeting Notice. Completion and return of the Form of Proxy will not prevent you from attending and voting in person at the General Meeting.

IMPORTANT INFORMATION

Forward looking statements

Certain statements in this Document constitute ''forward-looking statements''. Forward-looking statements include statements concerning the plans, objectives, goals, strategies and future operations and performance of the Company and the assumptions underlying these forward-looking statements. The Company uses the words ''anticipates'', ''estimates'', ''expects'', ''believes'', ''intends'', ''plans'', ''may'', ''will'', ''should'', and any similar expressions to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company's actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this Document. The Company is not obliged, and does not intend, to update or to revise any forwardlooking statements, whether as a result of new information, future events or otherwise except to the extent required by any applicable law or regulation. All subsequent written or oral forward-looking statements attributable to the Company, or persons acting on behalf of the Company, are expressly qualified in their entirety by the cautionary statements contained throughout this Document. As a result of these risks, uncertainties and assumptions, a prospective investor should not place undue reliance on these forwardlooking statements.

Financial data

Certain figures contained in this Document, including financial, statistical and operating information, have been subject to rounding adjustments. Accordingly, in certain circumstances, the sum of the numbers in a column or row in a table contained in this Document may not conform exactly to the total figure given for that column or row.

DEFINITIONS

The following definitions apply throughout this Document unless the context requires otherwise:

"Act"	the Companies Act 2006 as amended and includes the regulations made under the Act;
"AIM"	AIM, a market operated by the London Stock Exchange;
"AIM Rules"	the AIM Rules for Companies, incorporating guidance notes, published by the London Stock Exchange governing, inter alia, admission to AIM and the continuing obligations of companies admitted to AIM, as amended or reissued from time to time;
"Company"	In-Deed Online plc (incorporated and registered in England and Wales with registered number 7176993) whose registered office is at Elizabeth House, 39 York Road, London, SE1 7NQ;
"Company IPR"	all of the Company's intellectual property rights in its systems and technology;
"Completion"	completion of the Disposal;
"Consideration"	means £1, being the aggregate consideration for the Disposal;
"Directors" or the "Board"	the directors of the Company whose names are set out on page 9 of this Document;
"Disposal"	the conditional sale of Xanther and the Company IPR to the Purchaser pursuant to the Sale Agreement;
"Document"	this document, being a circular to Shareholders and accompanying General Meeting Notice;
"Form of Proxy"	the form of proxy accompanying this Document for use by the Shareholders in relation to the General Meeting;
"General Meeting"	the general meeting of the Company, convened by the General Meeting Notice, to be held at 11.00 a.m. at DWF LLP, 85 King William Street, London, EC4N 7BL on 2 July 2013, or any adjournment of that meeting, which is being held to consider the Resolutions;
"General Meeting Notice"	the notice convening the General Meeting on page 14 of this Document;
"Investing Company"	has the meaning given in the glossary to the AIM Rules;
"Investing Policy"	the proposed investing policy of the Company, to be pursued by the Company following Completion, further details of which are set out in paragraph 4 of Part I at page 8 of this Document;
"London Stock Exchange"	London Stock Exchange plc;
"Ordinary Shares"	the existing ordinary shares of £0.00375 each in the capital of the Company;
"Original Vendors"	Mathew Lewis and Paul Thomas;
"Purchaser"	Matthew Lewis (one of the Original Vendors);
"Resolutions"	the ordinary resolutions set out in the General Meeting Notice;
"Runnett"	Runnett & Co Limited (incorporated and registered in England and Wales with the registered number 6299873) whose registered office is at Elizabeth House, 39 York Road, London, SE1 7NQ;
"Shareholders"	holders of the entire issued ordinary share capital in the Company;
"Sale Agreement"	the conditional sale agreement between the Company and the Purchaser, relating to the Disposal, dated 30 May 2013, which is more particularly described in paragraph 2 of Part I of this Document;
"Xanther"	Xanther Limited (incorporated and registered in England and Wales with the registered number 7376664) whose registered office is at Elizabeth House, 39 York Road, London, SE1 7NQ.

CONTENTS

	Page
Definitions	3
Expected Timetable of Principal Events	5
Part I Letter from the Chairman	6
Part II Risk Factors	11
Notice of General Meeting	14

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Despatch of this Document	12 June 2013
Latest time and date for receipt of Forms of Proxy	11am on 28 June 2013
General Meeting	2 July 2013
Expected completion of the Disposal	2 July 2013

Notes

1.         References to time in this Document are to London time.

2.         If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on an RIS.

3.         All events in the above timetable following the General Meeting are conditional upon approval by the Shareholders of the Resolutions.

PART I

LETTER FROM THE CHAIRMAN

IN-DEED ONLINE plc

(Incorporated and registered in the England and Wales under the Companies Act 2006 with the registered number 7176993)

Directors:

Harry Hill (Chairman)
Peter Gordon
Philip Williamson
Boris Zhilin

Registered Office:

Elizabeth House
39 York Road
London
SE1 7NQ

12 June 2013

To the holders of Ordinary Shares

Dear Shareholder,

Proposed disposal of Xanther Limited and Company IPR
Proposed adoption of an Investing Policy
Notice of General Meeting

1.         Introduction

The Company announced on 31 May 2013 that it had entered into a conditional sale agreement with the Purchaser, dated 30 May 2013, for the sale of its wholly-owned subsidiary Xanther including its wholly owned subsidiary company, Runnett, which provides conveyancing services. The proposed completion of the sale of Xanther is conditional upon approval by Shareholders at the General Meeting. In relation to the Disposal, the Company will receive the Consideration of £1 and immediately prior to Completion will capitalise an existing loan balance from Xanther to the Company of £325,000 by way of the issuance of additional shares in Xanther.  A further £907,000 of inter company debt owed to the Company will be written off. Further details of the Disposal are set out below in paragraph 2.

The purpose of this Document is to provide Shareholders with further information on the Disposal and the Company's proposed investing strategy following the Disposal. The Disposal will constitute a fundamental change of business of the Company under Rule 15 of the AIM Rules, which requires the approval of Shareholders. The Disposal will result in the Company no longer being an operating business and thus becoming an Investing Company under the AIM Rules.  As such Rule 15 of the AIM Rules further requires the Company to state its Investing Policy in this Document and to obtain the approval of the Shareholders to the Investing Policy going forward. Further details of the Investing Policy are set out in paragraph 4 below.

Following approval of the Investing Policy by the Shareholders at the General Meeting, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the General Meeting, failing which, the Company's Ordinary Shares would then be suspended from trading on AIM. If the Company's Investing Policy has not been implemented within 18 months of the General Meeting, the admission to trading on AIM of the Ordinary Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.

Shareholders representing 4,639,523 Ordinary Shares, approximately 22.74 per cent. of the issued share capital of the Company, have provided irrevocable undertakings to vote in favour of the Resolutions. These irrevocable undertakings include direct shareholdings of the Directors (22.74 per cent.).

2.         Background to the Disposal

As predicted in the half year results of the Company, the winter of 2012/13 proved to be a testing environment for the Company's legal business, Runnett. The seasonal downturn conspired with the loss or suspension from key contracts due to service issues which had occurred during the busy periods during 2012, to produce material losses which had to be funded by cash loans from the Company.  The ability to recover from these set backs was hampered by the loss of several senior key staff.  In light of the low margins on the volume business it was concluded that efficiency gains were required which would come from operational improvements and a new IT system.  The Company's detailed review of this significant investment, together with prospective returns, led the Board to question the financial viability of the Runnett business and the Company's business overall.  The online volumes, whilst growing, remained relatively small and unprofitable, taking overheads into account.

As part of a detailed review, the Board appointed BDO LLP to examine its strategic options.  These concluded that a sale of Runnett was the best option for Shareholders, with a sale to Runnett's management the only feasible route given the fragile nature of certain customer relationships.  The Company therefore conditionally agreed to sell Xanther, the intermediate holding company of Runnett, to the Purchaser for £1 with a reverse premium of £325,000 which will support restructuring of the business, meet current liabilities and future losses.  An insolvent closure was considered but due to certain payments under the earn out with the Original Vendors plus a possible requirement to put 'run off' insurance cover in place, the Board considers it in the interests of Shareholders to conclude a solvent sale with the reverse premium. 

Without Runnett, the online business of the Company lacks critical mass and remains loss making.  The Board therefore included the intellectual property behind the Company's website in the Disposal thereby enabling the quickest closure and elimination of costs at the Company.  Following completion of the Disposal only two employees remain in the Company (being the executive Directors) and the sale of the intellectual property behind the website means the closure of the Company's business can be concluded quickly and with less cash expenditure.   Following Completion, the Company will have approximately £800,000 of cash and no liabilities other than those relating to the warranties and tax covenant referred to below and as listed in paragraph 4 below.

Summary of the Sale Agreement

Pursuant to the Sale Agreement the Company has agreed to sell the entire issued share capital of Xanther (and the Company's IPR), conditional upon Shareholder approval of the Disposal, to the Purchaser. At Completion the Company will also assign all of its interests in the Company's IPR to the Purchaser.

In the period between the signing of the Sale Agreement and Completion, the Company has agreed to conduct the business of Runnett in the ordinary course and in accordance with customary restrictions.

Consideration and Loans

The consideration under the Sale Agreement is £1.00 payable on Completion.

On 30 May 2013 the Company loaned £325,000 to Xanther.  Immediately prior to Completion, the Company is obliged under the Sale Agreement to capitalise this debt by way of issuance of shares in Xanther's capital.  The balance of £902,000 owing by Xanther to the Company will be written off prior to Completion.

Warranties and tax covenant

The Company has provided limited warranties in respect of Xanther (in respect only of its title to its shares in Xanther).

The Sale Agreement contains a tax covenant in favour of the Purchaser which includes customary provisions relating to the tax affairs of Xanther. The Company's liability under the tax covenant is limited to £325,000.

3.         The Company's operations following the Disposal

Immediately following Completion the Company will be an Investing Company and its assets will comprise of cash (approximately £800,000) and tax losses (approximately £2.7m).  The executive Directors will be the sole employees and the only additional ongoing costs will be those required to comply with company law and AIM listing requirements.

4.         Proposed Investing Policy

The Company's proposed Investing Policy, which is subject to Shareholder approval at the General Meeting, is set out below:

Investing Policy

On Completion, the Company will have disposed of all of its trading businesses and therefore (under Rule 15 of the AIM Rules) it will be re-classified as an Investing Company and will be required to adopt an Investing Policy, which must also be approved by the Shareholders.

The Company will have a generalist investing policy with the Company investing in all sectors. The Directors intend primarily to seek to invest in companies in the UK, which are active in the residential property market or provide services relating to residential property.

The Directors may consider it appropriate to take an equity interest in any proposed investment which may range from a minority position to 100 per cent ownership. Proposed investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project.

Where necessary, the Company may seek participation in the management or with the board of directors of an entity in which the Company invests or in the event that it is acquired then in the on-going enlarged entity.

New investments will be held for the medium to longer term, although shorter term disposal of any investments cannot be ruled out.

There will be no limit on the number of projects into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules. Where the Company builds a portfolio of related assets it is possible that there may be cross-holdings between such assets. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate.

Investments may be made in all types of assets and there will be no investment restrictions.

The Company's primary objective is that of securing for the Shareholders the best possible value consistent with achieving, over time, both capital growth and income for Shareholders through developing profitability coupled with dividend payments on a sustainable basis.

Following approval of the Investing Policy by the Shareholders at the General Meeting, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the General Meeting, failing which, the Ordinary Shares would then be suspended from trading on AIM. If the Investing Policy has not been implemented within 18 months of the General Meeting the admission to trading on AIM of the Ordinary Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.

The Directors believe that their broad collective business experience in the areas of residential property, estate agency, acquisitions, accounting, corporate and financial management will assist them in the identification and evaluation of suitable opportunities and will enable the Company to achieve its investing objectives. The Directors may undertake the initial project assessments themselves with additional independent technical advice as they judge may be required. The Company will not have a separate investment manager.

5.         Board

The Board of the Company consists of Harry Hill, Founder and Executive Chairman; Peter Gordon, Founder and Managing Director; Philip Williamson, Non-Executive Chairman and Borins Zhilin, Non-Executive Director.

While there is no present intention to alter the composition of the Board, its composition is kept under constant review to ensure that it has the correct balance of experience and knowledge to support its objectives.  The executive Directors have reduced their remuneration to £35,000 each per annum pending completion of an investment and the non-executive Directors will continue without fees until the same point.

6.         General Meeting

Completion of the Disposal and approval of the Investing Policy is conditional upon the passing of the Resolutions at the General Meeting. You will find set out at the end of this Document a notice convening the General Meeting to be held at 11.00 a.m. on 2 July 2013, at which the Resolutions will be proposed.

At the General Meeting, the following Resolutions are proposed as ordinary resolutions, as summarised below:

Resolution 1:

That the Disposal by the Company of its shareholding in Xanther and the Company's IPR, in accordance with the terms of the Sale Agreement, be approved.

Resolution 2:

That the Investing Policy be approved.

7.         Action to be taken by the Shareholders

A Form of Proxy for use in connection with the General Meeting accompanies this Document. The Form of Proxy should be completed in accordance with the instructions printed thereon and returned to the Company's registrars, Computershare Investor Services plc, The Pavilions, Bridgewater Road, Bristol, BS13 8AE as soon as possible, but in any event so as to be received by 11.00 a.m. on 28 June 2013.

The completion and return of a Form of Proxy will not preclude Shareholders from attending the General Meeting and voting in person, should they so wish. Shareholders who hold their Ordinary Shares through a nominee should instruct the nominee to submit the Form of Proxy on their behalf.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the General Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members and those CREST members who have appointed (a) voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who are able to take the appropriate action on their behalf.

8.         Board Recommendation

The adoption of the Investing Policy will provide the Board with the flexibility to actively seek out and acquire new investment opportunities, which the Board believes, with the injection of cash from the Company and the management's expertise, has the potential to create significant value for Shareholders.

The Board therefore considers the approval of the Disposal and adopting an Investing Policy to be in the best interests of the Shareholders as a whole. Accordingly, the Board recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting. Shareholders representing approximately 22.74 per cent. of the issued share capital of the Company have provided irrevocable undertakings to vote in favour of the Resolutions. These irrevocable undertakings include direct shareholdings of the Directors (22.74 per cent.).

Yours sincerely,

Harry Hill

Chairman

PART II

RISK FACTORS

Shareholders should carefully consider all of the information in this Document including the risks below. The Board have identified these risks as material risks, but additional risks and uncertainties not presently known to the Board, or that the Board consider immaterial, may  also adversely affect the Company. If any or a combination of the following risks materialise, the Company's business, financial condition and/or performance could be materially adversely affected. In any such case the market price of the Ordinary Shares could decline.

The following risk factors should not be considered in any order of priority. The Company's future performance might be affected by changes in market conditions and legal, regulatory and tax requirements.

RISKS RELATING TO THE COMPANY'S INVESTING POLICY

Limited operating history as an investing company

The Company will only commence pursuing its Investing Policy following approval of the Resolutions and, accordingly, after completion of the Disposal. The Company currently has no formally arranged  financing facilities other than the net proceeds of the Disposal and its other realisable investments. As a result, there can be no assurance that the Company will be successful or it will meet the objectives of its Investing Policy.

There is, therefore, no basis on which to evaluate the Company's ability to achieve its objective, implement its Investing Policy and provide a satisfactory investment return.

Any failure in achieving its Investing Policy or in managing its financial controls, reporting systems or procedures could have a material adverse effect on the Company's results of operations, financial condition and prospects.

Identifying a suitable target

The Company will be dependent upon the ability of the Directors to identify suitable investment opportunities and to implement the Investing Policy. As at the date hereof, the Directors have not identified any investment opportunities which they have resolved to pursue. If the Directors do not identify an opportunity that corresponds to the Investing Policy for creating value, then the Company may not be able to invest its cash in a manner which accomplishes its objectives. There is no guarantee that the Company will be able to acquire an identified opportunity at an appropriate price, or at all, as a consequence of which resources might have been expended fruitlessly on investigative work and due diligence.

Change in Investing Policy

The Investing Policy may be modified and altered from time to time, but only after obtaining Shareholder approval, so it is possible that the approaches adopted to achieve the Company's investment objectives in the future may be different from those presently expected to be used and disclosed in this Document.

Market conditions

Market conditions may have a negative impact on the Company's ability to execute investments in suitable assets which generate acceptable returns. There is no guarantee that the Company will be successful in sourcing suitable assets.

The Company can give no assurance as to how long it will take it to invest any or all of the Disposal

Proceeds, if at all, and the longer the period the greater the likely impact on the Company's performance and financial condition.

Costs associated with potential investments

The Company expects to incur certain third party costs associated with the sourcing of suitable investments. The Company can give no assurance as to the level of such costs, and given that there can be no guarantee that negotiations to acquire any given investment will be successful, the greater the number of deals that do not reach completion, the greater the likely impact of such costs on the Company's performance, financial condition and business prospects.

Ownership risks

Under the Investing Policy, the Company has the ability to enter into a variety of investment structures, including joint ventures, acquisition of controlling interests or acquisition of minority interests.

In the event the Company acquires a 100 per cent. interest in a particular asset or entity, or makes a single investment in an entity, the resulting concentration of risk may result in a total or partial loss on its investment and have a material adverse effect on the Company's performance.

In the event the Company acquires less than a 100 per cent. interest in a particular asset or entity, the remaining ownership interest will be held by third parties and the subsequent management and control of such an asset or entity may entail risks associated with multiple owners and decision-makers. Any such investment also involves the risk that third party owners might become insolvent or fail to fund their share of any capital contribution which might be required. In addition, such third parties may have economic or other interests which are inconsistent with the Company's interests, or they may obstruct the Company's plans, or they may propose alternative plans. If such third parties are in a position to take or influence actions contrary to the Company's interests and plans, this may affect the ability of the Company to implement its strategies.

In addition, there is a risk of disputes between the Company and third parties who have an interest in the asset or entity in question. Any litigation or arbitration resulting from any such disputes may increase the Company's expenses and distract the Directors from focusing its time to fulfil the Investing Policy. The Company may also, in certain circumstances, be liable for the actions of such third parties.

Due diligence process

The Company intends to conduct such due diligence as it deems reasonably practicable and appropriate, based on the facts and circumstances applicable to each potential project, before making an investment. The objective of the due diligence process will be to identify material issues which might affect an investment decision. When conducting due diligence and making an assessment regarding an investment, the Company will be required to rely on resources available to it, including, in the main, public information and, in some circumstances, third party investigations. As a result, there can be no assurance that the due diligence undertaken with respect to any potential project will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such project. Further, there can be no assurance as to the adequacy or accuracy of information provided during any due diligence exercise or that such information will be accurate and/or remain accurate in the period from conclusion of the due diligence exercise until the desired investment has been made. Due diligence may also be insufficient to reveal all of the past and future liabilities relating to the operations and activities of the target, including but not limited to liabilities relating to litigation, breach of environmental regulations or laws, governmental fines or penalties, pension deficits or contractual liabilities.

Valuation error

The Company may miscalculate the realisable value of an investment in a project. A lack of reliable information, errors in assumptions or forecasts and/or inability to successfully implement an investment, among other factors, could all result in the project having a lower realisable value than anticipated. If the Company is not able to realise an investment at its anticipated levels of profitability, projected investment returns could be adversely affected.

Financing

Implementation of the Investing Policy may require significant capital investment. The only sources of financing currently available to the Company are the Disposal Proceeds and any potential future issue of additional equity capital or shareholder loans. The Company's ability to raise further funds will depend on the success of existing and acquired investments. The Company may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Company may be required to reduce the scope of its investments or anticipated expansion. Further, Shareholders' holdings of Ordinary Shares may be materially diluted if debt financing is not available.

12 June 2013

NOTICE OF GENERAL MEETING

In-Deed Online plc (the "Company")

(Incorporated and registered in England and Wales under the Companies Act 2006 with the registered number 7176993)

NOTICE IS HEREBY GIVEN THAT a general meeting of the Company will be held at DWF LLP, Capital House, 85 King William Street, London, EC4N 7BL at 11.00 a.m. on 2 July 2013 to consider and, if thought fit, pass the following resolutions, which will be proposed as ordinary resolutions:

Ordinary resolutions

1.         THAT, for the purposes of Rule 15 of the AIM Rules for Companies published by the London Stock Exchange plc (the "AIM Rules") the agreement dated 30 May 2013 between (1) the Company and (2) Matthew Lewis relating to the disposal by the Company of the entire issued share capital of Xanther Limited and all of the Company's intellectual property rights, and related documentation, to be entered into pursuant thereto, as summarised in the circular to shareholders of the Company dated 12 June 2013 (the "Circular"), be and is hereby approved and that the directors of the Company (the "Directors") or any duly authorised committee of such Directors be and are hereby authorised to do all such things as they may consider to be necessary, desirable or expedient to implement such agreement in accordance with its terms.

2.         THAT the Investing Policy (as set out in the Circular) be and is hereby approved for the purposes of Rule 15 of the AIM Rules and that the Directors be and are hereby authorised to take all such steps as they may consider necessary or desirable to implement the same.

By Order of the Board Harry Hill Director

Registered office Elizabeth House 39 York Road London SE1 7NQ

IMPORTANT NOTES FOR SHAREHOLDERS

ENTITLEMENT TO ATTEND AND VOTE

1.         Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended by the Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009), the Company specifies that only those Shareholders registered in the Company's register of members at 11.00 a.m. on 2 July 2013 or, if the meeting is adjourned, in the register of members at 11.00 a.m. on the second day prior to the day of any adjourned meeting, shall be entitled to attend or vote at this General Meeting in respect of the number of shares registered in their names at that time. Changes to entries on the register after 11.00 a.m. on 2 July 2013 or, if the meeting is adjourned, in the register of members after 11.00 a.m. on the second day prior to the day of the adjourned meeting, will be disregarded in determining the rights of any person to attend, speak or vote at the meeting or at any such adjournment.

APPOINTMENT OF PROXIES

2.         If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the meeting and you should have received a form of proxy with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the form of proxy.

3.         A proxy does not need to be a member of the Company but must attend the meeting to represent you. Details of how to appoint the Chairman of the meeting or another person as your proxy using the form of proxy are set out in the notes to the Form of Proxy.

4.         You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please complete the requisite number of forms of proxy and state clearly on each form the number of shares in relation to which the proxy is appointed (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope.

5.         A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

APPOINTMENT OF PROXY USING HARD COPY FORM OF PROXY

6.         The notes to the form of proxy explain how to direct your proxy how to vote on each resolution or withhold their vote.

To appoint a proxy using the form of proxy, the form must be:

·            completed and signed;

·            sent or delivered to the Company's registrar at Computershare Investor Services plc, The Pavilions, Bridgewater Road, Bristol, BS13 8AE; and

·            received by the Company's registrar no later than 11.00 a.m. on 28 June 2013.

In the case of a member which is a company, the form of proxy must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company.

Any power of attorney or any other authority under which the Form of Proxy is signed (or a duly certified copy of such power or authority) must be included with the Form of Proxy.

APPOINTMENT OF PROXY BY JOINT MEMBERS

7.         In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the company's register of members in respect of the joint holding (the first-named being the most senior).

APPOINTMENT OF PROXIES THROUGH CREST

8.         CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

9.         In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's ("EUI") specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must, in order to be valid, be transmitted so as to be received by the issuer's agent Computershare Investor Services plc (Crest ID number 3RA50) by no later than 11.00 a.m. 28 June 2013. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.

10.        CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

11.        The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended by the Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009).

CHANGING PROXY INSTRUCTIONS

12.        To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.

Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hardcopy proxy form, please contact the Company's registrar.

If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

TERMINATION OF PROXY APPOINTMENTS

13.        In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to the Company's registrar. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the Company or an attorney for the Company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.

The revocation notice must be received by the Company's registrar no later than 11.00 a.m. on 28 June 2013.

Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.

CORPORATE REPRESENTATIVES

14.        A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that no more than one corporate representative exercises powers over the same share.

ISSUED SHARES AND TOTAL VOTING RIGHTS

15.        As at 5.30 p.m. on 11 June 2013, the Company's issued share capital comprised £76,500 Ordinary Shares of £0.00375 each. Each Ordinary Share carries the right to one vote at a general meeting of the Company and, therefore, the total number of shares carrying voting rights in the Company as at 5.30 p.m. on 11 June 2013 is 20,400,000.

 

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