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121 Media INC (OTO)

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Thursday 23 December, 2004

121 Media INC

Admission to AIM

                                121 Media, Inc.                                


121Media, Inc ('121Media' or the 'Company'), a global online contextual
advertising company, today announces the admission of its ordinary shares to
the Alternative Investment Market ('AIM') and the commencement of dealing in
its shares.

121Media delivers and manages targeted, contextual online advertising campaigns
on behalf of its clients. These clients are primarily the owners of well known
consumer brands or online advertising agencies.

On behalf of the Company, John East & Partners Limited has placed 894,878
shares at a placing price of 245p per share, to raise £1.72 million (net of
expenses), representing 12.6 per cent of the enlarged issued share capital. At
the placing price of 245p, the Company will have a market capitalisation on
admission of £17.40 million.

Kent Ertugrul, Chief Executive of 121Media, commented:

'We have been encouraged by the reaction of institutional investors to our

'Internet advertising revenue in the US rose 40% to $4.6 billion in the first
six months of 2004, and a significant part of the online advertising industry
is contextual advertising, on which 121Media is focused.We are therefore coming
to the market at an exciting time in our marketplace, and are very well placed
to take advantage of the growing demand for our services.

'The funds raised will allow us to accelerate the development of the business,
through the acquisition of more users, an increased direct sales presence, the
further development of our existing technologies and the establishment of a
presence in new markets. We will also benefit from the higher profile
associated with public company status and the ability to provide incentives to
senior staff by the use of options over publicly traded shares.'

For further information, please contact:

121Media                                      0870 405 7727      
Kent Ertugrul, Chief Executive                                   
John East & Partners Limited                  020 7628 2200      
John East                                                        
David Worlidge                                                   
Hogarth Partnership                           020 7357 9477      
John Olsen                                                       
Barnaby Fry                                                      
Edward Westropp                                                  

                                121 Media, Inc.                                


121Media, Inc ('121Media' or the 'Company'), a global online contextual
advertising company, today announces the admission of its ordinary shares to
the Alternative Investment Market (AIM) and the commencement of dealing in its

On behalf of the Company, John East & Partners Limited has placed 894,878
shares at a placing price of 245p per share, to raise £1.72 million (net of
expenses), representing 12.6 per cent of the enlarged issued share capital. At
the placing price of 245p, the Company will have a market capitalisation on
admission of £17.40 million.

Introduction to 121Media Inc.

121Media Inc delivers and manages targeted, contextual online advertising
campaigns on behalf of its clients. These clients are primarily the owners of
well known consumer brands or online advertising agencies.

The Company's software allows it to deliver highly targeted advertising to
large numbers of users, based on their browsing habits. The Company has acted
for more than 250 advertisers including British Airways, l'Oreal, British Gas,
O2, Dell, Panasonic and American Express. Their advertisements are delivered to
users based on an anonymous analysis of their browsing behaviour, which is
likely to indicate their commercial and lifestyle interests.

The Company's targeted advertising obtains very high response rates compared to
traditional untargeted advertising campaigns, which is very attractive to
advertisers. The Company is, therefore, able to charge on a success fee basis,
either per click-through to the advertiser's web site, or as a commission from
any ensuing transaction.

The Company's business model revolves around distributing its PageSense
technology to as many users as possible and showing users as many
advertisements as possible, without causing negative reaction, to maximise
response. In the case of PageSense Desktop negative user reaction can lead to
the user uninstalling the software. The Company also aims to generate the
highest yield possible from the advertisements shown, so as to capitalise on
the value of the limited showing opportunities. This is achieved by delivering
only the highest quality, best paying, advertisements in the most accurately
targeted way, remunerated by results.

Since the launch of its contextual advertising service in July 2003, the
Company has generated substantial growth by attracting a significant number of
users and gaining as clients a number of well-known advertisers. Currently, the
user base consists of an audience of more than 2 million people and the Company
delivers approximately 180 million advertisement impressions per month on
behalf of its clients. The proceeds of the Placing will, in part, be utilised
to acquire more users and the experience of the Directors shows that revenues
rise proportionately to the number of users acquired.

121Media currently acquires most of its users by integrating its PageSense
Desktop technology with consumer software products known as distribution
applications, which are offered free of charge to Internet users in exchange
for their permission to display advertisements. The Company has developed its
own distribution applications which integrate PageSense Desktop but has also
entered into strategic relationships to incorporate such software with freeware
products offered by third-party publishers.

The Company has 26 personnel. Of these, 11 are based in London, engaged in head
office administration and European sales and three are based in the New York
sales office; the remainder, comprising the software development team, are
based in Moscow.

Distribution Channels

The Directors believe that opportunities exist for expanding the business on a
large scale. This is based on the prevalence of freeware applications and the
increasing penetration and use of the Internet on a worldwide basis. The
PageSense Javascript application and the PageSense Desktop application each
have different distribution channels and therefore represent independent

The PageSense Javascript application can be embedded into web pages, where it
analyses their content and communicates this information to the Company's
servers. In this way, a profile of an individual consumer's browsing habits can
be compiled anonymously, which enables advertising to be targeted where it will
have the most impact. PageSense Javascript can be embedded by a variety of
partners, such as Internet Service Providers, serving pages to those connecting
to the internet through them, web publishers showing content to their user
bases, or wireless networks. The Directors expect to enter into the first such
partnership arrangement in the first quarter of 2005.

In order to distribute its PageSense Desktop application, the Company also has
commercial relationships with a number of third party producers of popular
software applications which are downloaded in large numbers. Although users
will generally not pay for these applications, they will agree, by accepting
the terms of the download, to view advertisements. PageSense Desktop has been
bundled with, amongst others, third party applications such as Wild Media,
eDonkey, Grokster, 2findmp3, Freewire p2p and Overnet. This represents a small
proportion of the available market, which the Directors intend to continue to


The Company's key Directors include:

David Svendsen, Non-executive Chairman, aged, 56, was until February 2000
chairman of Microsoft UK and vice president of Microsoft EMEA (Europe,
Middle-East & Africa) and prior to that was managing director of Microsoft UK
from 1988 to 1998. Prior to joining Microsoft UK, he was marketing director of
Microsoft Australia, where he oversaw the development of the business from
inception in 1984. He has had over 25 years of business management experience
in a wide range of companies including acting as a non-executive director of
SDL plc and eTechnology VCT plc.

Kent Ertugrul, Chief Executive, aged 41, has worked as an international
entrepreneur directly involved in the financial and technology industries for
more than 15 years. After induction in JP Morgan's management training
programme he joined Credit Suisse First Boston and then Morgan Stanley in
London. He then oversaw, as director and chief financial officer, the growth of
Compass Technology from 5 to 170 employees. As it became a leading PC-based
voice mail company in the US, Compass merged in 1991 with Milpitas, which in
turn was later acquired by Lucent Technology. Kent then began to focus on
Russia where, in addition to working on artificial intelligence based trading
systems and setting up a debt arbitrage partnership with GML in London, he
founded Migs Etc., a joint venture with the Russian Air Force and the Russian
Space Agency which offered joy rides to tourists in Mig-29 jet fighters, as
well as micro-gravity flights to civilians. Prior to starting PeopleOnPage,
Kent founded, a desktop software and online interactive diary, as well
as Voxster, a company enabling Instant Messaging for email.

Jordan Mitchell, Chief Operating Officer, aged 37, joined the Company in March
2003. He has spent the last 10 years growing technology companies from their
founding to profitability and market leadership positions. In 2001, Jordan
co-founded Siaxx Corporation to develop the first 'universal remote control'
for IT systems management. In 1995, he founded an e-business solutions firm in
Seattle which he sold in 1996. He remained a member of the management team at
the company, then known as Saltmine, which achieved annual sales of $35 million
in 2000.

The market

Internet advertising revenue in the United States was $4.6 billion in the first
six months of 2004, an increase of nearly 40 per cent compared to the
comparative period in 2003, according to the Interactive Internet Revenue
Report conducted independently by the New Media Group of PricewaterhouseCoopers
and sponsored by the Interactive Advertising Bureau.

A significant part of the online advertising industry is contextual
advertising, which is the display of advertisements designed to be attractive
to consumers, based upon their browsing habits. Claria Corporation, the leading
US based operator in the desktop contextual advertising market, generated $26
million before tax on revenues of $90 million in the year ended 31st December,
2003. The Directors believe that the Company's own system is at the cutting
edge of the online marketing business, offering advertisers the opportunity to
deliver large-scale, but specifically targeted, one-to-one marketing campaigns.
Advertisers can obtain measurable results from their campaigns, because
consumers receive advertisements which are intended predominantly to match the
interests and requirements which their browsing habits indicate.


Key elements of the Directors' strategy include increasing the user base, the
number of advertisers and the revenue per advertisement. These can be achieved
respectively by acquiring more users with the proceeds of the Placing,
investing in a larger direct sales force and by continuous improvement to user
targeting and effectiveness. At present, the Company does not access any users
using PageSense Javascript, although the Company is at an advanced stage of
negotiations with a number of Internet Service Providers and wireless networks.
The Directors believe that PageSense Javascript represents a major opportunity
to extend the Company's reach beyond the desktop. In the longer term, the
Directors intend to expand further internationally.

Summary Financial Information

The table below sets out a summary of the audited results of the Company for
the year ended 31st December 2003 and the six month period ended 30th June
2004. It also sets out unaudited management results for the three month period
ended 30th September 2004, which the Directors confirm has been made after due
and careful enquiry by them; John East & Partners Limited has also confirmed to
the Company that this estimate has been made after due and careful enquiry by
the Directors.

                                          Year ended    Six month  Three month
                                         31 December period ended period ended
                                                2003      30 June 30 September
                                           (audited)         2004         2004
                                                        (audited)  (unaudited)
                                                   $            $            $
Turnover                                     222,129    1,939,493    1,162,010
Costs and expenses                       (1,241,516)  (1,315,366)    (670,895)
Profit/(loss) before taxation and        (1,019,387)      624,127      491,115
before joint venture charges                                                  
Joint venture charges                       (82,383)    (840,613)    (345,377)
Profit/(loss) before taxation            (1,101,770)    (216,486)      145,738

Initially, the Company resisted the creation of a direct US sales presence,
preferring to operate under a US joint venture with Conducive Corporation LLC,
one of the leading on-line media agencies. Under the terms of the joint venture
arrangements, the joint venture entity was granted an exclusive, perpetual,
royalty free, licence, to exploit the behavioural marketing platform
commercially with third party freeware providers worldwide, outside Europe.
However, under these arrangements, Conducive Corporation LLC retained the
majority of any income so generated.

After several months, the Directors came to the view that it would be in the
Company's interest to operate its own sales and marketing team and develop its
own relationships with third party freeware providers, in order to increase
operating margins and profitability. In June 2004 it was agreed to dissolve the
joint venture arrangements so that 121Media could operate its business directly
on a worldwide basis.

Current Trading and Prospects

The trading results for the financial year to date are very encouraging and
confirm the expectations of the Directors, both with regard to margin
improvements resulting from the termination of the joint venture arrangement
with Conducive Corporation LLC and growth in the user base. In the fourth
quarter, the Company has been investing the proceeds of its interim funding for
the purpose of acquiring new users and selling advertising directly to end
users. The impact of investing funds in this way confirms the Directors'

The Directors believe that the desktop download business, which forms the basis
of the Company's current revenue, is capable of considerable growth. They
believe that PageSense Javascript represents a significant opportunity to
generate an additional source of revenue. The Directors believe that the net
proceeds of the Placing will give the Company the ability to generate
considerable growth by providing the funds to make the initial payments to its
distribution partners, which will enable it to acquire new desktop users and
increase direct advertising sales. The experience of the Directors shows that
funds invested in this way can generate significant returns.

For all these reasons, the Directors feel justified in looking to the future
with confidence.

Reasons for the Placing

The Directors believe that the growth of the Company will be accelerated by the
injection of equity capital raised by the Placing. These funds will be used to
obtain additional users; the experience of the Directors demonstrates that this
will increase revenues. They also believe that the Company will benefit from
the higher profile associated with public company status and the ability to
provide incentives to senior staff by the use of options over publicly traded

The net proceeds of the Placing receivable by 121Media will be used to
accelerate distribution through the acquisition of more user desktops; increase
the Company's direct sales presence; further develop its existing technologies;
develop new technology; and establish a presence in new markets.

                                   - Ends -                                    


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