THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about thecontents of this document you should consult a person authorised under the Financial Services and Markets Act 2000 who specialisesin advising on the acquisition of shares and other securities.

This document is drawn up as an Admission Document in accordance with the AIM Rules. This document does not constitute an offer to thepublic in accordance with the provisions of section 85 of the Financial Services and Markets Act 2000 (“FSMA”) (as amended by theProspectus Regulations 2005) and is not a Prospectus as defined in the AIM Rules. Accordingly this document has not been approved by theFinancial Services Authority pursuant to section 85 of FSMA.

Application will be made for the entire issued and to be issued ordinary share capital of Messaging International Plc (“the Company”) and forall of the issued Warrants to be admitted to trading on the AIM market of the London Stock Exchange plc (“AIM”). It is expected thatAdmission will become effective and dealings in the Ordinary Shares and the Warrants will commence on 3 August 2005.

AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached thanto larger or more established companies. AIM securities are not admitted to the Official List of the UK Listing Authority. Aprospective investor should be aware of the risks of investing in such companies and should make the decision to invest only aftercareful consideration and, if appropriate, consultation with an independent financial adviser. Neither the London Stock Exchange plcnor the UK Listing Authority have examined or approved the contents of this document.

Messaging International Plc(Registered in England and Wales, No.05204176)

Placing of 30,000,000 Placing Shares at 5p per share,

together with 1 Warrant for every 3 Placing Shares

and

Admission to trading on AIM of the Ordinary Shares and the Warrants

Nominated Adviser and Broker

SEYMOUR PIERCE LIMITED

Share Capital on AdmissionAuthorised Issued and fully paid

Amount Number Amount Number

£4,000,000 800,000,000 Ordinary Shares £576,900 115,380,000

Note: These figures assume subscription in full under the Placing, no issue of Deferred Consideration Shares or exercise of any of the Warrants.

All of the Ordinary Shares will, upon Admission, rank pari passu in all respects and will rank in full for all dividend and other distributionsdeclared, paid or made in respect of the Ordinary Shares after Admission.

The Directors of Messaging International Plc, whose names appear on page 3 of this document, accept responsibility for the informationcontained in this document including individual and collective responsibility for compliance with the AIM Rules published by the LondonStock Exchange plc. To the best of the knowledge of the Directors (who have taken all reasonable care to ensure that such is the case), theinformation contained in this document is in accordance with the facts and does not omit anything likely to affect the import of suchinformation.

Copies of this document will be available to the public free of charge at the offices of Seymour Pierce Limited at Bucklersbury House, 3 QueenVictoria Street, London EC4N 8EL, during normal business hours on any week day (excluding Saturdays and public holidays) from the dateof this document until one month from Admission.

Seymour Pierce Limited, which is regulated by the Financial Services Authority and is a member of the London Stock Exchange, is acting asnominated adviser for the purposes of the AIM Rules. Its responsibilities as such are owed solely to the London Stock Exchange plc and notto the Company or any Director or any other person. Seymour Pierce Limited is also the broker to the Company in connection with theproposed Placing and Admission and is acting for no one else and will not be responsible to anyone other than the Company for providing theprotections afforded to customers of Seymour Pierce Limited or for providing advice in relation to the proposed Placing and Admission. Norepresentations or warranties, express or implied, are made by Seymour Pierce Limited for the accuracy of any information or opinionscontained in this document or for the omission of any material information.

The distribution of this document outside the UK may be restricted by law and therefore persons outside the UK into whose possession thisdocument comes should inform themselves about and observe any restrictions as to the Placing, the Ordinary Shares, the Warrants or thedistribution of this document. The Ordinary Shares and the Warrants have not been, nor will be, registered in the United States under the UnitedStates Securities Act of 1993, as amended, or under the securities laws of Canada, Australia, Republic of Ireland, South Africa or Japan andthey may not be offered or sold directly or indirectly within the United States, Canada, Australia, Republic of Ireland, South Africa or Japanor to, or for the account or benefit of, US persons or any national, citizen or resident of the United States, Canada, Australia, Republic ofIreland, South Africa or Japan. This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe forOrdinary Shares or Warrants in any jurisdiction in which such offer or solicitation is unlawful.

CONTENTSPage

Directors, Secretary and Advisers 3

Definitions 4

Glossary of Technical Terms 6

Placing statistics and expected timetable 7

Key Information 8

Part I Information on the Group 10

Part II Risk Factors 22

Part III Accountant’s report on the Company 24

Part IV Accountant’s report on the Subsidiary 29

Part V Unaudited pro forma statement of net assets 45

Part VI Terms and Conditions of the Warrants 47

Part VII Additional information 50

2

DIRECTORS, SECRETARY AND ADVISERS

Directors: Horacio Furman, Non-Executive ChairmanGuy Levit, Chief Executive OfficerIrvin Fishman, FCA, Finance DirectorDavid Rubner, Non-Executive DirectorGeoffrey Michael Simmonds, FCA, Non-Executive Director

All of:58-60 Berners Street, London W1T 3JS, United Kingdom

Company secretary: Irvin Fishman

Registered office: 58-60 Berners StreetLondon W1T 3JSUnited Kingdom

Nominated Adviser and Broker: Seymour Pierce LimitedBucklersbury House3 Queen Victoria StreetLondon EC4N 8ELUnited Kingdom

Solicitors to the Company: In respect of the CompanyFiners Stephens Innocent LLP179 Great Portland StreetLondon W1W 5LSUnited Kingdom

In respect of the SubsidiaryOri Rosen & Co.Azrieli Centre(Round Building 1)Tel Aviv 67021Israel

Solicitors to the Placing: Wedlake Bell52 Bedford RowLondon WC1R 4LRUnited Kingdom

Auditors and reporting accountants: In respect of the CompanyBDO Stoy Hayward LLP8 Baker StreetLondon W1U 3LLUnited Kingdom

In respect of the SubsidiaryKost, Forer Gabbay & KasiererA member of Ernst & Young Global3 Aminadav St.Tel Aviv 67067Israel

Registrars Capita RegistrarsThe Registry34 Beckenham RoadBeckenhamKent BR3 4TUUnited Kingdom

Financial Public Relations: St Brides Media & Finance Ltd.46 Bedford RowLondon WC1R 4LR

3

DEFINITIONS

“Act” the Companies Act 1985, as amended

“Acquisition” the acquisition by the Company of the entire share capital of theSubsidiary pursuant to the Share Purchase Agreement

“Admission” the admission of the Existing Ordinary Shares and the PlacingShares and those of the issued Warrants to trading on AIMbecoming effective in accordance with the AIM Rules

“AIM” the AIM market of the London Stock Exchange

“AIM Rules” the rules published by the London Stock Exchange from time totime

“Americas” the USA, South America and Canada

“Board” or “Directors” the board of directors of Messaging International whose names areset out on page 3 of this document

“Code” the City Code on Takeovers and Mergers and the Rules GoverningSubstantial Acquisitions of Shares issued by the Panel

Messaging International Plc

“CREST” the computerised settlement system operated by CRESTCo whichfacilitates the transfer of title to shares in uncertificated form

“CRESTCo” CRESTCo Limited

“Deferred Consideration” the Deferred Consideration Shares in respect of the earn out whichmay be issued to the Vendors pursuant to the terms of the SharePurchase Agreement

“Deferred Consideration Shares” a maximum of 90,000,000 new Ordinary Shares which may beallotted and issued, credited as fully paid, as determined inaccordance with the terms of the Share Purchase Agreement to theVendors

“EU” European Union

“Existing Ordinary Shares” the Ordinary Shares in issue prior to the Placing and Admission

“FSA” the Financial Services Authority

“FSMA” Financial Services and Markets Act 2000 (as amended)

“Group” the Company and its subsidiaries

“Issue Price” 5p per Placing Share

“London Stock Exchange” London Stock Exchange plc

“Official List” the Official List of the UK Listing Authority

“Ordinary Shares” ordinary shares of 0.5p each in the capital of the Company

“p” pence

“Panel” the Panel on Takeovers and Mergers

“Placing” the conditional placing by Seymour Pierce, on behalf of theCompany, of the Placing Shares and the Warrants at the Issue Priceas described in this document

“Placing Agreement” the conditional agreement dated 27 July 2005 between (1) theCompany (2) the Directors (3) Seymour Pierce and (4) RTI relating

“Company” or “ MessagingInternational”

4

to the Placing, details of which are set out in paragraph 11.1 of PartVII of this document

“Placing Shares” the 30,000,000 new Ordinary Shares to be issued in connection withthe Placing

“Prospectus Rules” the prospectus rules published by the FSA

“Regulations” the Uncertificated Securities Regulations 2001

“RTI” Reverse Take-Over Investments plc, a wholly owned subsidiary ofWestside

“Seymour Pierce” Seymour Pierce Limited

“Shareholders” holders of Ordinary Shares

“Share Purchase Agreement” a share purchase agreement between the Vendors (1), the Subsidiary(2), the Company (3), Westside (4) and RTI (5) relating to theacquisition of the entire issued share capital of the Subsidiary dated20 July 2005, details of which are set out in paragraph 11.4 ofPart VII of this document

“Subsidiary” TeleMessage Ltd., a company registered in Israel with companynumber 51-279112-0

“TeleMessage Inc. TeleMessage Inc., a company registered in Delaware with companynumber 3192397

“UK” the United Kingdom of Great Britain and Northern Ireland

“UK Listing Authority” or “UKLA” the FSA acting in its capacity as the competent authority for thepurposes of FSMA

“Unapproved Share Option Scheme” the unapproved share option scheme of the Company, details ofwhich are set out in paragraph 12 of Part VII of this document

“USA” or “US” or “United States” the United States of America, its territories and possessions, anystates of the United States and the District of Columbia and all otherareas subject to its jurisdiction

“Vendors” those persons who are the shareholders of the Subsidiaryimmediately prior to the completion of the Acquisition and who areparties to the Share Purchase Agreement

“Warrant Instrument” the warrant instrument of the Company dated 24 May 2005

“Warrants” warrants to subscribe for 100,000,000 Ordinary Shares at 5p pernew Ordinary Share, of which 35,000,000 warrants are in issue asat the date hereof and prior to the Placing further details of whichare set out in Part VI and paragraph 4 of Part VII of this document

“Warrantholders” holders of Warrants

“Westside” Westside Acquisitions plc

5

GLOSSARY OF TECHNICAL TERMS

“ARPU” average revenue per user

“HTTP” hypertext transport protocol – a protocol used to request andtransmit files, especially web pages and web page components overthe internet

“ICQ” an instant messaging client which allows instant textcommunication between two or more people through the internet

“IM” instant messaging–exchanging messages in real-time between twoor more people

“ISP” internet service provider

“IVR” interactive voice response – an automated telephone informationsystem that speaks to the caller with a combination of fixed voicemenus and data extracted from databases in real-time

“Mail Plug-in” a product which enables the user to send and receive SMS, MMS,voice and Fax messages from a PC

“MIME Message” multipurpose internet mail extension – a communications protocolthat allows for the transmission of data in many forms, such asaudio, binary or video

“MMS” multi media messaging system

“OEM” original equipment manufacturer

“RFP” request for proposal

“SMTP” simple mail transfer protocol – the standard e-mail protocol on theinternet and part of the TCP/IP protocol suite

“SMS” short message service

“SMS to Landline” a product which enables the user to send a SMS to a fixed linephone (via text to speech)

“Speech Recognition” a technology which allows computers to interpret human speech

“Telco(s)” telecommunications company

“Video Messaging” transferring video recorded messages between two parties

“VOIP” voice over internet protocol – a telephone service that uses theinternet as a global telephone network

“WAP” wireless application protocol – a standard for providing cellularphones and other handheld devices with secure access to e-mail andtext-based Web pages

“Wireless” telecommunications which are not wired

“wireline” telecommunications network enabling connection using fixed-lineinfrastructure

“XML” extensible mark-up language – an open standard for describing datawhich is used for defining data elements on a web page andbusiness-to-business documents

6

THE PLACING AND THE OFFER FOR SUBSCRIPTION STATISTICS

Issue Price 5p

Number of Existing Ordinary Shares 85,380,000

Number of Placing Shares being issued pursuant to the Placing 30,000,000

Number of Warrants being issued pursuant to the Placing 10,000,000

Number of Ordinary Shares in issue at Admission following the Placing* 115,380,000

Number of Warrants in issue at Admission following the Placing 50,000,000

Percentage of the enlarged issued ordinary share capital represented by the Placing Shares* 26%

Market capitalisation at the Issue Price* £5,769,000

Estimated net proceeds of the Placing receivable by the Company (excluding VAT) £1,175,000

*Assuming that the Deferred Consideration Shares have not been issued and none of the Warrants have been exercised

EXPECTED TIMETABLE

Trading to commence in the enlarged issued ordinary share capital and the issuedWarrants on AIM and, where applicable, Ordinary Shares (including the Placing Shares) and Warrants credited to CREST 8.00 a.m. on 3 August 2005

Where applicable, definitive share certificates for Ordinary Shares (including the Placing Shares) and Warrants despatched by 10 August 2005

7

KEY INFORMATION

• The Company is intending to raise £1.175 million (net of expenses and excluding VAT) through thePlacing and is seeking admission of the Existing Ordinary Shares, the Placing Shares and the issuedWarrants to trading on AIM in order to exploit and develop its multimedia messaging business.

• The Company’s initial strategy is twofold: firstly, to enable various communications service providersto offer their customers rich media messaging capabilities across various media platforms, with theintention of increasing ARPU, and secondly, to enable businesses to house robust and easy-to-usemessaging applications for communication between employees, clients and business partners.

• The Company’s longer term strategy is to become one of the leading providers in the messaging valueadded service provider market by bridging the gap between traditional messaging technologies (voice,fax, email) and the emerging messaging technologies (IM, SMS, MMS) thereby positioning itself totake advantage of the Group’s ability to harmonise traditional and rich media messaging, enablingenhanced and ubiquitous messaging capabilities.

• The Group is led by an experienced management team comprising, Guy Levit, Gil Shapira, MarkCarlin and Benny Bornfeld who have between them over 50 years’ experience in the high-technicaland communications sector.

The Opportunity

The Directors have identified a number of key factors which they believe make the Company an attractiveinvestment opportunity:

• The Directors believe that the attractiveness of the Company’s technology and products resides intheir ability to harmonise various media platforms to act as a seamless messaging network acrossmany technologies.

• The Directors believe that the market opportunity for the Group lies in the strong installed base ofmature messaging applications such as voicemail, fax and email and the expanding interest andgrowth of emerging messaging markets, such as short message service (SMS (wireless text)), instantmessaging (IM) and multimedia and video messaging (MMS). In the Directors’ view, end-users arelikely to benefit from solutions, like those provided by the Group, that enable a seamless exchange ofvarious messaging types (such as: voice, fax, email, SMS, IM, MMS, etc.) across a range of mediaplatforms.

• The Group’s technology enables service providers to employ a scalable and modular technologyplatform which is designed to be able to adapt to technology trends.

• The Group’s messaging platform supports multiple languages, multimedia attachments (such asimage, sound and video), text to speech conversion, email notification, full-length email to mobiles,two-way interactive replies, greetings and other content management interfaces and full chasingcapabilities.

• On top of its core messaging platform, the Group has developed, to date, seven products.

• The Group’s products and services have been sold to several high profile service providers andcorporate and government clients and trials with other high profile potential clients are in progress.

• The Group has already formed partnerships with a number of companies to resell and distribute itsproducts.

• Based on information which is available in the public domain, the Directors are of the opinion that thecurrent products of the Group’s known major competitors lack certain features existing in the Group’smain products and for this reason the Directors’ view the Group as having an advantage over suchcompetitors. The Group also has a patent pending application on certain retrieval technology whichthe Directors believe will enhance the Group’s product offering to the messaging market.

8

• The Group’s product roadmap includes potential growth opportunities in, for example, MMS, Videomessaging, Speech Recognition, and VOIP.

The Placing

• The Company is seeking to raise up to £1.175 million (net of expenses and excluding VAT) by wayof a Placing of 30,000,000 Placing Shares together with 10,000,000 Warrants at a price of 5p perPlacing Share.

• It is anticipated that the Ordinary Shares and Warrants will be admitted to trading on AIM on 3 August2005.

The information above has been derived from, and should be read in conjunction with, the full text ofthis document and as an introduction to it. Investors should read the whole of this document andshould not rely solely on the “Key Information” set out above. In particular, your attention is drawnto the section entitled “Risk Factors” in Part II of this document. Any decision by an investor to investin the Ordinary Shares and Warrants should be based on consideration of the document as a whole.

9

PART I

INFORMATION ON THE GROUP

INTRODUCTION

The Group has developed cross-platform media messaging management systems and applications. Suchsystems and applications are designed to enable PC, browser, mobile phone and wireline telephone users tosend, receive and manage voice messages, email, SMS, IM and MMS across various media platforms. TheDirectors believe that one of the attractive features of the Group’s technology and products resides in theirability to harmonise various media platforms to act as a seamless messaging network across manytechnologies. The Group also has a pending patent application for certain retrieval technology which theDirectors believe will enhance the Group’s product offering to the messaging market.

The Group offers to service providers (including wireline and wireless telecommunications companies, ISPsand portals) businesses and technology OEMs, products and services that are designed to utilise theemerging interactive and cross-platform messaging market.

The multimedia messaging market in which the Group is active, is a growing market. The Group’s objectiveis to be one of the leading providers in this market.

The Group is currently developing its business in worldwide markets with its principal operating premiseslocated in the US and Israel. The Group has developed and successfully deployed a number of products to avariety of high profile Telcos and corporate clients in response to market demand. The Group has anexperienced management team, a marketing approach and product development plan which the Directorsbelieve is well suited for the current and potential messaging market, and, importantly, has major accountssigned and an active pipeline of future business. The Group’s major direct and indirect accounts include highprofile wireless and wireline operators.

HISTORY OF THE GROUP

On 20 July 2005, the Company acquired the entire issued share capital of the Subsidiary pursuant to theShare Purchase Agreement the consideration for which was the issue of 65,380,000 Ordinary Shares and thegrant of 25,000,000 Warrants. In addition, the Deferred Consideration will be payable to the Vendors if theprofits before taxation of the Subsidiary for the three year period commencing 1 January 2005 and ending31 December 2007 are greater than USD$3,500,000 such that the Vendors will be allotted and issued inaggregate 5,000,000 further new Ordinary Shares, credited as fully paid (at the Issue Price per share), foreach whole amount of USD$250,000 by which the profits of the Subsidiary exceed USD$3,500,000, up toa maximum of a further 90,000,000 new Ordinary Shares. Further details of this agreement can be found atparagraph 11.4 of Part VII.

The Subsidiary, founded in 1999, currently has 24 employees (part time and full time) and has offices in theBoston area and Israel. The Subsidiary has historically raised in aggregate approximately US$13.8 millionfrom a consortium of international venture capitalists. Those funds were raised for general working capitalincluding to develop the Group’s cross-platform media messaging management systems, to build a sales andmarketing team and to secure the initial client base and to support those clients.

The Subsidiary is an Israeli based company which owns TeleMessage Inc., a Delaware company, which actsas the Group’s sales and marketing office in the Americas.

MARKETING STRATEGY

The Group has successfully implemented its strategy in four primary areas:

1. Regional – the Group has changed its major focus from Europe to the United States and the rest ofthe world;

10

2. Targets – the Group has extended its target client base from ISPs to include both wireline and wirelesscarriers;

3. Channels – the Group has altered its European sales force from in-house sales to sales representativesand agents;

4. Products – the Group divided the full messaging platform into products with specific market demand,for example “SMS to Landline” and the “Mail Plug-in”.

The Directors believe that with this marketing strategy the Group is well placed to succeed in the messagingmarket. To date the Group has signed deals for the provision of services with a number of high profile Telcosand corporates based in North America, Israel and Europe.

THE MARKET OPPORTUNITY

The Directors believe that the market opportunity for the Group lies in the strong installed base of maturemessaging applications like voicemail, fax and email and the expanding interest and growth of emergingmessaging markets, like SMS (wireless text), instant messaging (IM), and multimedia and video messaging(MMS). In the Directors’ view, end-users are likely to benefit from solutions, like those provided by theGroup, that provide a seamless exchange of various messaging types (such as: voice, fax, email, SMS, IM,MMS) across a range of media platforms.

Service Providers

Communications service providers already provide the accepted and established messaging technologies(e.g. voicemail, email) to their customers, and they are expanding their respective product and service lineto include the latest messaging applications and services. The traditional messaging technologies are stillused by consumers, in addition to the latest messaging applications. Accordingly, in order to cater for thismarket, the Directors believe that these service providers will need to maintain technology platforms whichsupport the traditional messaging applications as well as enabling them to interface with new applications.To achieve this, service providers may for example, choose to purchase new platforms to support the newtechnologies as they become available or to employ a scalable and modular technology platform (such asthose provided by the Group’s products). The Group’s messaging technology platform also comes with readymade applications (e.g. “SMS to Landline”, “Mail Plug-in”).

Emerging Messaging Applications

The Group has developed products that utilise a technology which allows traditional and emergingmessaging applications to interact. The Group’s core messaging technology platform provides serviceproviders with upgrading capabilities to support the past, present and emerging messaging communicationtechnologies in the market.

The wireless industry’s growth and revenue is increasingly being driven by usage of applications rangingfrom SMS, to IM, MMS, picture, music and video messaging as well as internet browsing.

Usage of SMS and email messaging combined with rapid growth in the adoption of wireless IM and earlyadoption of MMS is demonstrated by the graphs overleaf showing the forecasted US messaging volume andrevenue.

11

Forecast: US Messaging volume and revenue, 2003 To 2009

Forrester, Sizing The US Mobile Messaging Market, July 2004

The above charts have been accurately reproduced and as far as the Directors are aware and are able toascertain from information published by Forrester, no facts have been admitted which would render theabove information inaccurate or misleading.

12

TARGET MARKETS

The Group’s strategy is to focus on three distinct markets: (1) service providers, (2) corporates, and (3)technology OEMs.

Service Providers

Service providers include wireline and wireless operators, wireline and wireless ISPs, virtual mobile andnetwork operators. The Group’s main “manual” interfaces (SMS, Mail Plug-in, Web, WAP, Telephone(IVR)), are directed at this market. These interfaces allow new messaging options for the consumer andbusiness customers of service providers thereby enabling such providers to generate additional revenues. TheDirectors believe that these new messaging options are arising as a result of the convergence of mobile,internet, fixed telephony and other communication modes.

Corporates

Corporates normally use the “automatic” interfaces (SMTP, XML and HTTP Post) and sometimes sendmessages via the “One to Many” manual web interface. The Group offers messaging applications for a widerange of vertical and intra-company uses. These applications allow corporates, by way of simple automationof critical business applications, to solve very specific problems. Also, the Group’s products and technologyare designed to solve a problem faced by many companies, namely that of converging different and dispersedmessaging systems into one system, and offer many advanced services in an open, robust and manageableplatform.

Corporates are from a wide range of markets such as security companies, financial institutions, travelcompanies and corporates. For these markets, the Group’s products and technologies enable personalisedinformation to be sent to individuals and distribution groups.

Technology OEMs

Technology OEMs include companies that provide various types of messaging systems, primarily messagingapplications and systems to service providers. Many of the Group’s products are considered by the Board tobe add-on functionality and revenue generating services to existing messaging applications and systems. TheGroup has partnership contracts with a number of US and European based technology OEMs.

THE GROUP’S PRODUCTS

The Group’s core technology system architecture is based on a three-tiered store and forward technology.The Subsidiary has developed to date seven key products in addition to its core technology, of which the twomain products being “SMS to Landline” and “Mail Plug-in”.

SMS to Landline

This key product of the Group enables a mobile originated SMS to be sent to any telephone number (whethermobile or fixed line numbers). The platform will send the SMS as a voice message via Text to Speech to thefixed line phone to receive SMS and in addition enables the recipient to respond with his/her own voice. Thevoice reply returns to the originator as a SMS message and the originator then dials into the server to hearthe recorded reply. Additional features of this product include “SMS to Fax” (which enables the user to senda text message to a fax machine) and “Text to Song” (which enables the user to enter song initials into anSMS message to a fixed line phone to play the song.

Mail Plug-in

This is designed to enable messages to be sent to communication devices (e.g. SMS, MMS, voice and fax)from popular software (e.g. Microsoft Outlook, Microsoft Outlook Express, IBM Lotus Notes) via a regularSMTP email message. Calendar reminders and email notifications can be sent to SMS retrieved and repliedto by voice or text. The product is integrated into an existing address book for ease of use. In addition tohandling various media conversions, adaptations, transcoding and resizing, allowing MMS messagingservice from a PC, the Mail Plug-in is equipped with a MMS Player and MMS Composer allowing the

13

conversion of many types of messages and enables a subscriber to view how the result will be displayed onmobile handsets.

Multi-Alert

This product is designed to provide an open XML interface to the Group’s platform to enable a user tomanage messaging with replies and status facilities. Multi-Alert is aimed at enabling a seamless integrationinto existing communication systems. It can act as a layer in a company’s existing customer relationshipmanagement, notification or alert process, or can become a fundamental core of such a process. It is designedto enable a company to interact with its customers at any time, while leveraging on its current systemsinvestments.

Email on the Go

Emails can be received on mobile telephones as SMS or listened to as a voice message via Text-to-Speech.Response can be made by voice or text which will be converted to email. The aim is to enable users toconsolidate different email accounts (in addition to the Group’s email account), receive email notificationsto SMS (after filtering), listen to chosen messages and reply to email messages.

One to Many Messaging

This product is designed to enable an end user to send, receive, reply and forward text, voice or imagemessages to and from any communication device including WAP, SMS, Web, email, IM ICQ, phone, fax,and pager. Messages can be sent to one person or a group of people. Each recipient can reply to the messageand the sender can receive these replies on any communication device. This service can be accessed andutilized from a Web browser, Outlook mail client, mobile phone or a landline phone.

V-SMS (and V-Email)

The V-SMS solution is designed to enable a user to record a voice message and send it as a simple SMS. Thereceiver of the message can hear the SMS and with one-click can reply, delete, save and forward the message.

MusiMsg

E-greetings including songs and voice messages can be sent to many communication devices (for exampletelephone fixed line and mobile, fax, SMS, email, instant messenger and pager) enabling content and serviceproviders to deliver content over many media devices, including SMS, phone, WAP and Web. MusiMsg’saim is to enable users to have easy access to media over their preferred device for browsing, listening,customizing, personalizing and sending content to themselves and others.

THE GROUP’S CLIENT BASE

The Group targets both consumer and corporate end-users and markets its products via service providers,corporates and OEMs. To date the Group has signed agreements with several service providers, largecorporate clients and several small corporate clients directly and indirectly. Additional service providers arecurrently participating in trials with the Group and additional service providers are in a RFP (request forproposal) process.

THE GROUP’S TECHNOLOGY

The Group’s technology platform includes a centralised database architecture with endpoints to interfaceeach of the various devices, with a dispatching engine which interacts between the database and endpoints.The database holds user and message data, queues and events.

In the Board’s view, the attractiveness of the Group’s technology and products resides in their ability toharmonise various media platforms to act as a seamless messaging network across many technologies. TheDirectors believe the system deployed by the Group is attractive due to the following factors:

• Services mechanism (load balancing, redundancy and monitoring);

• Efficient and seamless voice compression and conversion;

14

• Efficient automated caching and distribution of information & content to remote sites;

• Reply to SMS for which a patent application is pending;

• Voice, data, text, images, video and document unification;

• Chasing rules mechanism over various media and communication channels;

• SMTP/MIME Message conversion to various media (E-mail to any media);

• Interoperability over various SMS gateways: one solution for many network types;

• Open platform – designed to support future media/communication types as plug&play including 3rdparty systems/protocols;

• Integrated 2-Way Messaging and Communication; and

• Extensive customization on many interfaces.

System Architecture

The system has a 3-tier hierarchy, separating the different parts, which are:

(1) Access and Input Tier

(2) Management and Storage Tier

(3) Delivery Tier

This separation is intended to enable simplification and flexibility for both expansion of service andscalability.

The Group’s core technology system architecture is based on a three-tiered store and forward technology asdepicted below:

The Core Technology System Architecture

Intellectual Property

The Group has developed many of its products in-house and the intellectual property rights vest in therelevant Group companies. The Group is reliant upon these intellectual property rights to conduct its businessas currently undertaken. In addition, the Subsidiary has a patent application which is pending and relates toseveral aspects of the Group’s technology so that users who receive SMS via the Group’s system will be ableto reply by voice with one click.

15

REVENUES

The Group’s products and technology are designed to enable potential messaging users to receivecomprehensive and easy-to-use messaging services. Both corporates and service providers can either licensethe Group’s technology and products or utilise the Subsidiary as their service provider. The Group’s revenuegeneration is by way of licensing fees or services on a hosted platform (usually a revenue share for servicesprovided). A corporate can either receive the Group’s products and services from its respective serviceprovider, receive hosting services from the Subsidiary or license the Group’s technology and products andself-host the services. An element of the Group’s strategy is to focus on selling its products and services toservice providers and OEMs to enable them to provide relevant products or services to end users.

THE GROUP’S BUSINESS MODEL

Revenue Sources

The following table shows the Group’s revenue sources for each of the deal structures for listed target clients.

Service License/OEM

Client Services

In both its services and licensing models, the Group offers professional services to plan, customize anddeploy its messaging services including:

• Project planning and management;

• Customization;

• Provisioning system integration or interface;

• Billing system integration or interface;

• Customer care training, documentation and tools;

• Sales and marketing support; and

• Equipment sizing configuration and installation.

With its strategic partners, the Group can offer end-to-end services including customer support and directend-user billing.

Sales Channels

The Group utilises two key sales channels, direct sales and indirect sales. The Group engages an experiencedsales team to generate leads, identify the key contacts, initiate a relationship and close deals with potentialcustomers. Direct sales are conducted mainly in the United States. Indirect sales are conducted primarily inEurope and the Far East. The Subsidiary has entered into contracts with sales representative professionalsand system integrators within various regions and countries and in addition, the Subsidiary has, and isfinalising relationships with, a number of telecommunications resellers.

• Set-up and customisation• Initial installation fee• Software licensing (according to

number of users or capacity)• Maintenance fee

• Set-up and customisation• A percentage of certain revenues

generated by the service• Hosting and maintenance fee

Service Providers

• Set-up and customisation• Initial installation fee• Software licensing according to

capacity (i.e. telephony ports)• Maintenance fee

• Set-up and customisation• Per message sent according to cost

and message volume• Hosting and maintenance fee

Corporates

16

COMPETITION

The Group has carried out a competition analysis of its key products. The Directors consider the Group tobe at an advantage to these competitors due to its two way capability, voice and fax capabilities, advancedmedia transcoding engine, its ability to convert messaging files to various media and its reply functionalitythrough its “reply to SMS” pending patent.

CURRENT TRADING AND PROSPECTS

It is the Board’s intention that the Group continues to focus mainly on the mobile telecommunications sectorin the North American market for the “SMS to Landline” product. In the past year, the Group acquired highprofile wireless operators as first customers which launched the product to their customers. In May 2005 oneof these Canadian wireless operators added additional features including the “Text to Song” music launch.The Group is also in negotiation with additional high profile mobile operators in North America who arelooking to launch the product in the near future.

The Board intends to widen the Group’s focus in developing relationships with mobile operators in Europeand the Far East and South America which are seeking to launch the “Mail Plug-in” product to theircustomers. The Group is currently undertaking a number of serious evaluations from high profile Telcos inEurope and the Far East, some of which include request for proposals, pilots and trials.

The Group has recently launched a beta version of the MMS Mail Plug-in and has had a good response fromcustomers to its offering. The Group is in ongoing discussions with its partners to launch this productsuccessfully to the market.

THE DIRECTORS

Horacio Furman, aged 58, Non-Executive Chairman

Horacio Furman is the CEO of Prideway Holdings Ltd. and he is a director of Arba Finance Company Ltd.and Picom Software Systems Ltd. and has worked with Estevan International, Ltd., a telecommunicationsequipment marketing company in the development of new markets, primarily for Israeli high tech telecomtechnologies’ companies. Mr Furman previously was a director of the Israel Corporation (listed in Israel) aswell as Executive Vice President for Projects at UDI, Inc., a trading company, where as head of the Chinaoperations he was involved in the introduction to China of various telecoms technologies. Prior to that,Mr Furman held positions in Production and Marketing at ISCAR, Ltd. Mr Furman holds a B.Sc inMechanical Engineering and a M.Sc in Materials Engineering from the Technion, Israel’s Institute ofTechnology, and an MBA from INSEAD.

Guy Levit, aged 34, Chief Executive Officer

Guy Levit was appointed chief executive of the Subsidiary in July 2002 and was one of its founders in 1999.Prior to his current position he held various sales, marketing and operational positions within the Group. From1996 until 1999 Mr Levit was the head of the planning and development department of an elite technical unitin the Intelligence corps of the Israeli Defence Force (I.D.F). In this role Mr Levit was in charge of budgets,project management and the design, development, implementation and maintenance of organisational,managerial and logistical information systems. Previously Mr Levit was an engineer in the I.D.F R& Dsubdivision.

Irvin Fishman, aged 55, Finance Director

Mr Fishman qualified as a chartered accountant in 1974 and has been a Partner in Auerbach Hope, CharteredAccountants, since 1978. He held the position of Finance Director at Entertainment Rights Plc, a fully quotedpublic company for several years before more recently becoming a Non-Executive Director and Chairmanof its Audit Committee.

David Rubner, aged 65, Non-Executive Director

(Formerly Tibor)

David Rubner is chairman and chief executive officer of Rubner Technology Ventures Ltd. and partner inHyperion Israel Advisors Ltd., a venture capital firm. From 1991 until 2000 Mr Rubner was president and

17

chief executive officer of ECI Telecom Ltd. (NYSE: ECIL), one of Israel’s largest communicationcompanies. Mr Rubner serves on the board of directors of Check Point Software Technologies Ltd.(NASDAQ: CHKP), Koor Industries Ltd., Elbit Imaging Ltd., Lipman Electronic Engineering Ltd., cVidyaNetworks and Bamboo Media Casting, Inc. Mr Rubner holds a B.Sc degree in Engineering from QueenMary College, University of London and an M.S. degree from Carnegie Mellon University.

Geoffrey Simmonds FCA, aged 62, Non-Executive Director

Geoffrey is a non-executive director of the Company and is chief executive officer of Westside and is non-executive chairman of York Pharma plc, both AIM traded companies. He qualified as a Chartered Accountantin 1966. He has extensive involvement and experience in corporate and strategic planning, acquisitions andfinance.

He holds various other private company directorships and was one of the founder shareholders and directorsof United Trust & Credit Plc (now part of Carlisle Holdings Limited), UTC Trading Corporation Plc(subsequently renamed Hemingway Properties Plc) and Chelsea Flowers Plc (now part of Game Group Plc).

KEY MANAGEMENT

Mark Carlin, aged 44, VP Sales North America

Mr Carlin is a senior level executive with hands on management experience in strategic planning, productmanagement, and sales and marketing of high technology software products. Mr Carlin held various salesand marketing positions in established companies such as HP Control Data and GE Electronics and in start-ups including Pads Software, AccuSoft and Quandrant Software. Holds a BSc in Electrical Engineering fromthe University of Massachusetts and an MBA from Rivier College.

Gil Shapira, aged 35, Vice President Business Development

Mr Shapira was one of the founders of the Subsidiary in 1999. Between 1999-2005 he held various sales,marketing and operational positions in the Subsidiary as well as a liaison officer to its European office. MrShapira served in the Israeli Air Force from 1993 – 1999 as a computer programmer, project manager andteam leader of a special R&D software development unit. Mr Shapira holds a B.Sc. in AerospaceEngineering from the Technion, Israel’s Institute of Technology and a M.Sc. in Industrial Engineering fromTel Aviv University.

Benny Bornfeld, aged 40, VP Research and Development

Mr Bornfield is a multi-disciplinary software development manager with over 13 years of experience indesigning, developing and delivering advanced software/hardware products. Mr Bornfield has provenexperience in forming and leading development groups to successful completion in terms of cost, time andcontent. Prior to joining the Subsidiary in 2004 Mr Bornfield served as the manager of developmentinfrastructure in Comverse. Mr Bornfield holds a BS.c in Engineering from the Technion and a MBA fromthe Haifa University (1996).

SHARE OPTIONS

The Directors consider that an important part of the Group’s remuneration policy should include equityincentives through the grant of share options to Directors and employees. As at the date of this documentoptions have been granted over 1,870,213 Ordinary Shares to employees of the Group in accordance withthe terms of the Share Purchase Agreement in exchange for the previous options which were granted or weredue to be granted in the Subsidiary which were then cancelled. In addition, it is the intention of the Directorsto grant further options under the terms of the Unapproved Share Option Scheme to current and futureemployees of the Group. Further options will be granted at a subscription price which is not less than themarket value of the Ordinary Shares at the date of grant under the Unapproved Share Option Scheme.

The maximum number of Ordinary Shares which will be subject to options granted under the UnapprovedShare Option Scheme will be no more than 10 per cent. of the Company’s issued ordinary share capital fromtime to time. Further details are set out in paragraph 12 of Part VII of this document.

18

DETAILS OF THE PLACING AND ADMISSION

The Company is proposing to raise approximately £1.5 million (£1.175 million net of expenses, excludingVAT) by the placing of 30,000,000 Placing Shares with certain institutional and other investors, representingapproximately 26 per cent. of the issued share capital of the Company at Admission together with 1 Warrantfor every 3 Placing Shares subscribed for pursuant to the Placing (rounded to the nearest whole number).

Under the Placing Agreement, Seymour Pierce has agreed as agent for the Company, conditional, inter aliaon Admission, to use its reasonable endeavours to procure placees for the Placing Shares at the Issue Price.The Placing has not been underwritten by Seymour Pierce. The Placing Shares will rank pari passu in allrespects with the Existing Ordinary Shares. The Placing Agreement contains provisions entitling SeymourPierce to terminate the Placing Agreement at any time prior to completion of the Placing in certaincircumstances. Further details of the Placing Agreement are set out in paragraph 11.1 of Part VII of thisDocument.

Application will be made for the Existing Ordinary Shares, the Placing Shares and the issued Warrants to beadmitted to trading on AIM. Dealings in the Ordinary Shares and Warrants on AIM are expected tocommence on 3 August 2005.

The Placing Shares will be placed free of expenses and will rank pari passu in all respects with the ExistingOrdinary Shares including the right to receive all dividends and other distributions declared, paid or madeafter the date of issue.

THE TAKEOVER CODE

Under Rule 9 of the Code, where any person acquires, whether by a transaction or a series of transactionsover a period of time or not, shares which (taken together with shares held or acquired by persons acting inconcert with him) carry 30 per cent. or more of the voting rights of a company, that person is normallyrequired by the Panel to make a general offer to the shareholders of that company to acquire the balance ofthe equity share capital of the company at the highest price paid by him or any person acting in concert withhim in the previous 12 months.

Rule 9 of the Code also provides, inter alia, that where any person who, together with persons acting inconcert with him, holds not less than 30 per cent. but not more than 50 per cent. of the voting rights of thecompany, acquires additional shares which carry voting rights, then, that person must normally make ageneral offer to the other shareholders to acquire the balance of the shares not held by that person at thehighest price paid by him or any person acting in concert with him in the previous 12 months.

Under the Code, a concert party arises where persons acting together pursuant to an agreement orunderstanding (whether formal or informal) actively co-operate, through the acquisition by them of sharesin a company, to obtain or consolidate control of that company. Control means holding, or aggregateholdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whetherthe holding or holdings give de facto control. The panel regards the Vendors as persons acting in concert forthe purposes of the Code by virtue of them being shareholders in a private company.

On 19 July 2005 RTI held the beneficial interest in 20,000,000 Ordinary Shares. RTI held 19,999,800Ordinary Shares in its own name and 200 Ordinary Shares were held jointly by Geoffrey Simmonds and RTIon trust for RTI. On 20 July 2005 the Company entered into the Share Purchase Agreement whereby theVendors were allotted and issued 65,380,000 Ordinary Shares, were granted 25,000,000 Warrants and acontractual right to receive up to 90,000,000 Deferred Consideration Shares. In addition, on the same day,1,542,606 options to subscribe for Ordinary Shares were granted to certain of the Vendors and 327,607options to subscribe for Ordinary Shares were granted to employees of the Company who are not membersof the Concert Party. No Deferred Consideration Shares will be allotted and issued until after 31 December2007.

19

The following table sets out the individual holdings of the members of the Concert Party:

Maximumnumber of

Number of DeferredOrdinary Number of Consideration Number of Maximum

Name Shares Warrants Shares options held % holding*

Guy Levit Ltd. 365,148 152,145 547,722 0 0.46Guy Levit 4,022,460 1,676,025 6,033,690 21,821 5.07Gil Shapira Ltd. 365,148 152,145 547,722 0 0.46Gil Shapira 4,022,460 1,676,025 6,033,690 21,821 5.07Noam Camiel Ltd. 210,770 87,821 316,155 0 0.27Eliyahu David Ltd. 326,693 136,122 490,039 0 0.41Shira Bareket 377 157 565 0 0.00Eitan Yakobi 1,149 479 1,724 0 0.00Atar Morgenshtern 780 325 1,170 0 0.00Amichai Rothman 18,308 7,628 27,462 52,144 0.05Daniel Shrem 20,484 8,535 30,726 69,358 0.06Doron Perelstein 32,066 13,361 48,099 99,477 0.08Liona Amado 2,635 1,098 3,953 23,712 0.01Ofer Dangoor 6,587 2,745 9,881 22,395 0.02Yafit Ilan 7,087 2,953 10,631 24,847 0.02Yaniv Kunda 41,265 17,194 61,898 125,641 0.11Yossi Shteingart 12,383 5,160 18,575 101,183 0.06Mark Carlin 52,692 21,955 79,038 432,783 0.25Brad Lemire 18,991 7,913 28,487 5,270 0.03Andy Klassman 10,538 4,391 15,807 42,154 0.03Prideway Holdings Ltd. 34,492,934 14,372,054 51,739,396 0 43.38Prideway II L.P. 14,298,297 5,957,624 21,447,446 0 17.98Arba Finance Company Ltd. 582,890 242,871 874,335 0 0.73Prideway II L.P. 5,380,000 0 0 0 2.32Rubner Technology

Ventures Ltd. 288,512 120,213 432,768 0 0.36David Rubner 0 0 0 500,000 0.22Wellington Partners

Ventures II GmbH & Co. 213,910 89,129 320,865 0 0.27Mofet Israel TechnologyFund Ltd. 208,280 86,783 312,420 0 0.26

Holland Ventures III B.V. 208,280 86,783 312,420 0 0.26Israel Infinity Venture

Capital Fund (Israel) L.P. 49,581 20,659 74,372 0 0.06Israel Infinity Venture Capital

Fund (Cayman I) L.P. 9,192 3,830 13,788 0 0.01Israel Infinity Venture Capital

Fund (Cayman II) L.P. 19,031 7,930 28,547 0 0.02Israel Infinity Venture

Capital Fund(Delaware) L.P. 83,191 34,663 124,787 0 0.10

Golden WingInvestments Ltd. 7,881 3,284 11,822 0 0.01

——–—— ———–— ——–—— —–——— ——–——Total 65,380,000 25,000,000 90,000,000 1,542,606 78.44——–—— ——–—— ———–— ——–—— ——–——*following the placing and issue of the Deferred Consideration Shares and assuming exercise of all Warrants and options held by theVendors and no exercise of Warrants or options by any other Warrantholders or optionholders.

20

Your attention is drawn to the notes in paragraph 6.1 of Part VII which sets out in detail any interests of theDirectors in the above companies.

The following table sets out the aggregate beneficial shareholding of the Vendors in certain situations:

• Beneficial• Holdings• at the time of this document* 76.57%• following the Placing* 56.66%• following the Placing and assuming issue of the Deferred Consideration Shares* 75.65%• assuming exercise of all Warrants other than those held by the Vendors† 46.57%• assuming exercise of all Warrants and options held by the Vendors and

no exercise of Warrants or options by any other Warrantholders or optionholders† 64.76%• assuming exercise of all Warrants and options held by the Vendors and no exercise

of Warrants or options by any other Warrantholders or optionholders and the issue ofthe Deferred Consideration Shares† 78.44%

* assuming no exercise of Warrants or options by any person

† following the placing

In the event that one or more of the Vendors cease to be acting in concert, such position to be agreed withthe Panel in advance, prior to the issue of the Deferred Consideration and the exercise of their respectiveWarrants or options, then it is possible that the issue of the Deferred Consideration and the exercise of suchrelative Warrants or options could trigger an obligation to make a general offer to the shareholders of theCompany to acquire the balance of the equity share capital of the Company under Rule 9 of the Code.

The Panel has ruled that the issue of any new Ordinary Shares as a result of the Deferred Considerationbecoming due and payable to the Vendors or following the exercise of any of the Warrants or options willnot oblige the Vendors, either individually or collectively, to make an offer for the whole of the issued or tobe issued share capital of the Company under Rule 9 of the Code. Further details concerning theshareholdings of the Vendors, the Deferred Consideration Shares and the Warrants are set out in paragraphs4 and 11.1 of Part VII of this document.

It should be noted that as the members of the concert party will hold more than 50 per cent. of the Company’svoting share capital on Admission and provided they continue to remain over 50 per cent following theexercise of Warrants or options described above then, for so long as they continue to be treated as acting inconcert, they may increase their aggregate shareholding in the Company without incurring any obligationunder Rule 9 of the Code to make a general offer, although individual members of the concert party will notbe able to increase their individual shareholding through a Rule 9 threshold without Panel consent. Howeverif the concert party holding drops below 50 per cent. but remains over 30 per cent. then members of theconcert party will be unable to increase their aggregate or individual shareholding which increases theirpercentage of the voting rights in the Company except through the exercise of warrants, options or the issueof Deferred Consideration Shares as described above.

LOCK-INS AND ORDERELY MARKET ARRANGEMENTS

The Directors and all other Shareholders have agreed, subject to certain limited exceptions, that they will notdispose of any interest in Ordinary Shares or Warrants for the period of 12 months following Admissionsubject to certain exceptions and thereafter for a 12 month period following the first anniversary ofAdmission, any disposals of their shares shall be subject to an orderly market arrangement betweenthemselves and Seymour Pierce.

21

REASONS FOR THE PLACING AND USE OF PROCEEDS

The Company is proposing to raise approximately £1.5 million (£1.175 million net of expenses, excludingVAT) and the Directors intend to use the proceeds of the Placing as set out below (in order of priority):

SalesResearch and DevelopmentMarketingOperationsGeneral Working Capital

In addition, the Directors believe that Admission will assist in raising the public profile of the Group.

CREST

CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by certificateand transferred otherwise than by written instrument. The Company’s articles of association permit theCompany to issue Ordinary Shares and Warrants in uncertificated form in accordance with the Regulations.Application has been made for the Ordinary Shares and Warrants to be admitted to CREST on Admission.CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be ableto do so.

DIVIDEND POLICY

The strategy of the Directors is to generate capital growth for existing and new Shareholders. They willrecommend the payment of dividends when it becomes commercially prudent to do so and then subject tothe availability of distributable reserves and the retention of funds required to finance future growth.

CORPORATE GOVERNANCE

The Directors recognise the importance of sound corporate governance and intend, in so far as is practicablegiven the Company’s size and the constitution of the Board, to comply with the main provisions of theCombined Code: Principles of Corporate Governance and Code of Best Practice.

The Board

The Board is responsible for formulating, reviewing an approving the Company’s strategy, budgets andcorporate actions. The Company intends to hold board meetings as and when required.

Committees

The Directors have established an audit committee and a remuneration committee. The remunerationcommittee, consisting of Horacio Furman as chairman and Irvin Fishman, will determine the terms andconditions of service of the executive Directors, including their remuneration and grant of options under theUnapproved Share Option Scheme established by the Company. The audit committee, consisting of HoracioFurman as chairman and Geoffrey Simmonds, has primary responsibility for monitoring the quality ofinternal control and ensuring that the financial performance of the Company is properly measured andreported on and for reviewing reports from the Company’s auditors relating to the Company’s accountingand internal controls, in all cases having due regard to the interests of Shareholders.

The Directors intend to comply with Rule 21 of the AIM Rules relating to directors’ dealings as applicableto AIM companies and will also take all reasonable steps to ensure compliance by the Company’s applicableemployees.

FURTHER INFORMATION

Your attention is drawn to Parts II to VII (inclusive) of this document which provide additional information.

22

PART II

RISK FACTORS

The Directors consider the following risks and other factors to be the most significant for potential investors,but the risks listed do not necessarily comprise all those associated with an investment in the Company.

• The value of the Ordinary Shares and Warrants may go down as well as up. Investors may thereforerealise less than their original investment.

• Whilst the Directors have no current plans for raising additional capital after completion of the Placingand are satisfied that the working capital available to the Company will, from Admission, be sufficientfor its present requirements, that is for at least the next twelve months, it is possible that the Companywill need to raise extra capital in the future to fully develop its business.

• The market in which the Group is operating is characterised by rapidly evolving industry standards andmany of the companies competing in this sector have substantially greater financial, marketing andresearch & development resources, longer operating histories, greater name recognition, andestablished co-operative relationships. As the market grows, new alliances between competitors mayemerge which could reduce the Group’s potential sales, margins and market shares. Competitors coulddevelop superior technology which could render the Group’s products uncompetitive or competitorscould develop products that achieve greater market acceptance than the Group’s products. In the future,the Group may experience pricing pressures from competitors and customers which may adverselyaffect potential sales levels and/or gross margins. The future success of the Group will therefore dependto a large extent upon the Group’s ability to develop and introduce new products and enhancements toexisting products to meet and broaden customer needs and to anticipate developments in the market andchanges in industry standards. No assurance can be given that new products or product enhancementswill satisfy customer requirements or can be developed in time to meet market opportunities, willachieve a sufficient level of acceptance in new and existing markets, or will successfully anticipaterapid technological changes or new industry standards.

• The Group’s success will depend in part on its ability to secure and maintain patent protection andcopyright for its products and processes, to preserve its trade secrets and to operate without infringingthe proprietary rights of third parties. Existing trade secret, copyright and trademark laws and non-disclosure agreements only offer limited protection and, in addition, law in certain countries in whichthe Group’s products may be sold may not protect the Group’s proprietary technology to the sameextent.

• No assurance can be given that any pending patent application or any future patent applications willresult in granted patents, that the scope of any copyright or patent protection will exclude competitorsor provide competitive advantages to the Group, that any of the Group’s patents will be held valid ifchallenged or that third parties will not claim rights in or ownership of the copyright, patents and otherproprietary rights held by the Group.

• The Group may be subject to claims in relation to infringement of patents, trademarks or otherproprietary rights. Adverse judgments against the Group may give rise to significant liability inmonetary damages, legal fees and an inability to manufacture, market or sell products either at all or inparticular territories using existing trademarks and/or particular technology. If the Group has givenassurances to customers that its products do not infringe proprietary rights of third parties, any suchinfringement might also expose the Group to liabilities to those customers. Even claims without meritcould deter customers and have a detrimental effect on the Group’s business as well as being costly andtime consuming to defend and diverting Group resources.

• There can be no assurance that others have not developed or will not develop similar products orduplicate any of the Group’s products. Others may hold or receive patents which contain claims havinga scope that covers products developed by the Company (whether or not patents are issued to theGroup).

23

• In view of its worldwide activities in the communications field the Group may be subject to variousregulatory requirements in various countries, such as a requirement to obtain a governmental licensefor its activities in transferring messages to landlines or mobile devices. To the extent regulatoryrequirements do exist, the Group may be required to incur costs in obtaining such licenses andmaintaining them.

• The principal offices of the Group are located in Israel and its research and development and most ofits commercial activities are performed in or from Israel. Accordingly, political, economic and militaryconditions in Israel directly affect the Group’s operations. Since the establishment of the State of Israelin 1948, a number of armed conflicts have taken place between Israel and its neighbouring states. Astate of hostility, varying in degree and intensity, has led to security and economic problems for Israel.Since October 2000, there has been an increase in hostilities between Israel and the Palestinian Arabs,which has adversely affected the peace process and has negatively influenced Israel’s relationship withits Arab citizens and several Arab countries. Such ongoing hostilities may hinder Israel’s internationaltrade relations and may limit the geographic markets where the Group can operate. Any hostilitiesinvolving Israel or threatening Israel, or the interruption or curtailment of trade between Israel and itspresent trading partners, could materially and adversely affect the Group’s operations.

• The Israeli Stamp Duty on Documents Law, 1961 (the “Stamp Duty Law”) provides that mostdocuments signed by Israeli companies are subject to a stamp duty, generally at a rate of between 0.4per cent. to 1 per cent. of the value of the subject matter of such document. It has been common practicein Israel not to pay such stamp duty unless a document is filed with a governmental authority. As aresult of an amendment to the Stamp Duty Law that came into effect on 1 June 2003, the Israeli taxauthorities have approached many companies in Israel and requested the disclosure of all agreementssigned by such companies after 1 June 2003 with the aim of collecting stamp duty on such agreements.The legitimacy of the aforementioned amendment to the Stamp Duty Law and of said actions by theIsraeli tax authorities are currently under review by the Israeli High Court of Justice. Although at thisstage it is not yet possible to evaluate the effect, if any, on the Group of the amendment to the StampDuty Law, the same could materially adversely affect the Group’s results of operations.

• The Company’s future revenues depend upon the continuation of certain key contracts and theconversion of trial contracts into full contracts. There can be no guarantee that these contracts willcontinue or that trial contracts will convert. The loss of any of these contracts could have a materiallyadverse effect on the future revenues of the Group.

• The future success of the Group depends largely on the expertise of the executive Directors and keyemployees. Whilst the Group has entered into contractual arrangements with the Directors and keyemployees, the retention of their services is not guaranteed. The loss of key personnel could have amaterial adverse effect on the Group’s future by impairing its ability to expand and develop its business.

• It may be difficult for an investor to sell his or her Ordinary Shares or Warrants and he or she mayreceive less than the amount paid by him or her for them. The Ordinary Shares and Warrants may notbe suitable for short-term investment. Neither the Ordinary Shares nor the Warrants will be quoted onthe Official List and investments in shares traded on AIM may be considered to carry a higher degreeof risk than investments in shares quoted on the Official List.

• The development of the Group’s business is at an early stage and the growth of sales may not happenas rapidly as the Directors anticipate.

The investment described in this document may not be suitable for all those who receive it. Beforemaking a final decision, investors in any doubt are advised to consult their stockbroker, bank manager,solicitor, accountant or other professional adviser authorised under FSMA.

24

PART III

Part A

ACCOUNTANT’S REPORT ON THE COMPANY

The Directors 27 July 2005Messaging International Plc58-60 Berners StreetLondonW1T 3JS

The DirectorsSeymour Pierce LimitedBucklersbury House3 Queen Victoria StreetLondonEC4N 8EL

Dear Sirs

Messaging International Plc (“the Company”)

We report on the financial information set out in Part B below. This financial information has been preparedfor inclusion in the admission document dated 27 July 2005 of the Company (“the Admission Document”).

Responsibilities

As described in paragraph 1 to the financial information, the Directors of the Company are responsible forthe preparing the financial information on the basis of preparation set out in paragraph 2 to the financialinformation and in accordance with generally accepted accounting principles and practices in the UnitedKingdom.

It is our responsibility to form an opinion on the financial information as to whether the financial informationgives a true and fair view, for the purposes of the Admission Document, and to report our opinion to you.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standardsissued by the Auditing Practices Board in the United Kingdom. Our work included an assessment ofevidence relevant to the amounts and disclosures in the financial information. It also included an assessmentof significant estimates and judgements made by those responsible for the preparation of the financialstatements underlying the financial information and whether the accounting policies are appropriate to theentity’s circumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial information is free from material misstatement whether caused by fraud or other irregularity orerror.

BDO Stoy HaywardChartered Accountants

BDO Stoy Hayward LLP8 Baker Street London W1U 3LL

25

Opinion

In our opinion, the financial information gives, for the purposes of the Admission Document, a true and fairview of the state of affairs of the Company as at the date stated in accordance with the basis of preparationset out in paragraph 2 to the financial information.

Declaration

Having taken all reasonable steps to ensure that such is the case, the information contained in this report is,to the best of our knowledge and belief, in accordance with the facts and contains no omissions likely toaffect its import.

Yours faithfully

BDO Stoy Hayward LLPChartered Accountants

26

Part B

FINANCIAL INFORMATION

1. Responsibility

The Directors of the Company are responsible for the financial information set out below.

2. Accounting policies

The financial information has been prepared under the historical cost convention and in accordance withgenerally accepted accounting principles and practices in the United Kingdom.

The Company was incorporated on 12 August 2004 as RTI Eighteen PLC. On 24 May 2005, it changed itsname to TeleMessage International Plc and on 12 July 2005 changed its name to Messaging InternationalPlc. Since incorporation, the Company has not traded, nor has it received any income, incurred any expensesor paid any dividends. Consequently no profit and loss account is presented. The financial information isbased on the audited financial statements of the Company for the period from incorporation to 31 December2004.

Balance sheet as at 31 December 2004

As at31 December

2004Notes £

Current assetsCash at bank and in hand 25,002

————Total assets less current liabilities 25,002————Capital and reservesCalled up share capital 2 25,002

————Shareholders’ funds – equity interests 3 25,002————Cash flow statement for the period ended 31 December 2004

Period ended31 December

2004Notes £

Net cash outflow from operating activities –————

Net cash outflow before management of liquid resources and financing –

FinancingIssue of ordinary share capital 25,002

————Net cash inflow from financing 25,002

————Increase in cash in the period 4 25,002————

27

Notes to the financial information

1 Employees

There were no employees during the period apart from the directors who received no remuneration.

2 Share capital

As at31 December

2004£

Authorised1,000,000 ordinary shares of £1 each 1,000,000————Allotted and called up 25,002 ordinary shares of £1 each 25,002————During the period, 100,000 ordinary shares of £1 each were allotted, of which 2 ordinary shares arefully paid and 99,998 ordinary shares are paid up as to 25 pence. On 24 May 2005, the outstandingamount in respect of these shares was paid up.

On 24 May 2005, the authorised share capital of the Company was increased from £1,000,000 to£4,000,000 by the creation of 3,000,000 ordinary shares of £1 each and subsequently each issued andunissued ordinary share of £1 were sub-divided into 200 shares of 0.5 pence each.

3 Reconciliation of movements in shareholders’ funds

Period ended31 December

2004£

Loss for the financial period –Proceeds from issue of shares 25,002

————Net addition to shareholders’ funds 25,002Opening shareholders’ funds –

————Closing shareholders’ funds 25,002————

4 Analysis of net funds

As at As at12 August 31 December

2004 Cash flow 2004£ £ £

Net cash:Cash at bank and in hand – 25,002 25,002

———— ———— ————Net funds – 25,002 25,002———— ———— ————

28

5 Reconciliation of net cash flow to movement in net funds

Period ended31 December

2004£

Increase in cash in the period 25,002————

Movement in net funds in the period 25,002Opening net debt –

————Closing net funds 25,002————

6 Post balance sheet events

On 20 July 2005, the Company acquired the entire issued share capital of TeleMessage Ltd. in returnfor the issue of 65,380,000 ordinary share of 0.5 pence each in the Company at a price of 5 pence pershare, credited as fully paid together with 25,000,000 Warrants to purchase Ordinary Shares of 0.5peach at 5p per share. Deferred consideration is also payable, dependent on the profits before taxationof TeleMessage Ltd. for the period 1 January 2005 to 31 December 2007, of up to a maximum of afurther 90,000,000 new ordinary shares of 0.5p each.

29

PART IV

ACCOUNTANTS’ REPORT ON TELEMESSAGE LTD.

The Directors ofMessaging International Plc58-60 Berners StreetLondonW1T 3JS

The DirectorsSeymour Pierce LimitedBucklensbury House3 Queen Victoria StreetLondon EC4N 8ELUnited Kingdom

27 July 2005

Dear Sirs,

TELEMESSAGE LTD.

We report on the financial information set out below. This financial information has been prepared forinclusion in the Admission Document dated 27 July 2005, of Messaging International Plc on the basis of theaccounting policies set out in note 2. This report is required by Schedule Two of the AIM Rules and is givenfor the purpose of complying with that Schedule and for no other purpose.

Responsibility

The Directors of Messaging International Plc are responsible for preparing the financial information on thebasis of preparation set out in note 2 to the financial information and in accordance with InternationalFinancial Reporting Standards (“IFRS”).

It is our responsibility to form an opinion on the financial information as to whether the financial informationgives a true and fair view, for the purposes of the Admission Document and to report our opinion to you.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reports issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the financial information. It also included an assessment of significant estimatesand judgments made by those responsible for the preparation of the financial statements underlying thefinancial information and whether the accounting policies are appropriate to TeleMessage Ltd.’scircumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial information is free from material misstatement whether caused by fraud or other irregularity orerror.

ERNST&YOUNG Kost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 67067, Israel

Phone: 972-3-6232525Fax: 972-3-5622555

30

Opinion

In our opinion, the financial information gives, for the purposes of the Admission Document of MessagingInternational Plc dated 27 July 2005, a true and fair view of the state of affairs of TeleMessage Ltd. as at thedates stated and its profits, cash flows and recognized gains and losses for the periods then ended inaccordance with the basis of preparation sat out in note 2 and in accordance with the IFRS as described innote 2.

Declaration

We are responsible for this report as part of the Admission Document and declare that, having taken allreasonable care to ensure that the information contained in this report is, to the best of our knowledge, inaccordance with the facts and contains no omission likely to affect its import. This declaration is included inthe Admission Document in compliance with Schedule Two of the AIM Rules.

Yours faithfully,

KOST FORER GABBAY & KASIERERA Member of Ernst & Young Global

31

CONSOLIDATED BALANCE SHEETS

In U.S. dollars (except share data)

31 December2004 2003 2002

ASSETSCURRENT ASSETS:

Cash and cash equivalents $141,004 $112,422 $225,773Trade receivables 82,806 8,062 15,096Other receivables and prepaid expenses (Note 3) 49,522 62,235 136,395

————— ————— —————Total current assets 273,332 182,719 377,264

————— ————— —————NON CURRENT ASSETS:

Severance pay fund 108,446 97,904 75,216Property and equipment, net (Note 4) 81,744 79,147 358,344Other assets, net (Note 5) 4,209 5,612 7,014Restricted cash 10,000 10,000 17,177

————— ————— —————Total non current assets 204,399 192,663 457,751

————— ————— —————Total assets $477,731 $375,382 $835,015————— ————— —————LIABILITIES AND SHAREHOLDERS’ DEFICIENCYCURRENT LIABILITIES:

Current maturity of convertible loans (Note 7) 749,023 – –Trade payables 61,852 36,594 116,022Accrued expenses and other liabilities (Note 6) 148,469 126,396 159,564

————— ————— —————Total current liabilities 959,344 162,990 275,586

————— ————— —————LONG-TERM LIABILITIES:

Accrued severance pay 170,861 124,642 79,160Convertible loans (Note 7) 2,995,046 2,332,115 954,062

————— ————— —————Total long-term liabilities 3,165,907 2,456,757 1,033,222

————— ————— —————Total liabilities 4,129,573 2,619,747 1,308,808

————— ————— —————SHAREHOLDERS’ DEFICIENCY (Note 9):

Ordinary shares, NIS 0.01 par value: 246,500,000,20,846,500 and 20,846,500 shares authorized at 31 December 2004, 2003 and 2002, respectively; 7,854,682 shares issued and outstanding at 31 December 2004, 2003 and 2002 19,227 19,227 19,227

Series A Convertible Preferred shares, NIS 0.01 par value:2,153,500 shares authorized at 31 December 2004,2003 and 2002; 2,056,517 shares issued and outstanding at 31 December 2004, 2003 and 2002 4,994 4,994 4,994

Additional paid-in capital 10,262,334 10,170,597 10,069,762Accumulated deficit (13,934,075) (12,439,183) (10,567,776)

————— ————— —————Total shareholders’ deficiency (3,647,520) (2,244,365) (473,793)

————— ————— —————Total liabilities and shareholders’ deficiency $477,731 $375,382 $835,015————— ————— —————The accompanying notes are an integral part of the consolidated financial statements.

32

CONSOLIDATED STATEMENTS OF OPERATIONS

In U.S. dollars, except share and per share data

Year ended 31 December2004 2003 2002

Revenues $408,560 $60,279 $86,195Cost of revenues (Note 12a) 169,883 333,615 395,990

————— ————— —————Gross profit (loss) 238,677 (273,336) (309,795)Operating expenses:

Research and development (Note 12b) 500,325 445,171 602,238Selling and marketing (Note 12c) 606,314 613,402 459,293General and administrative (Note 12d) 331,908 381,030 524,643

————— ————— —————Operating loss 1,199,870 1,712,939 1,895,969Financial expenses, net (Note 12e) 299,672 158,468 113,231Other income (expenses) (Note 12f) 4,650 – (82,151)

————— ————— —————Net loss $1,494,892 $1,871,407 $2,091,351————— ————— —————Net loss per share:Basic and diluted net loss per share $(0.19) $(0.24) $(0.35)————— ————— —————Weighted average number of shares used in computing

basic and diluted loss per share 7,854,682 7,854,682 5,926,836————— ————— —————Pro forma basic and diluted loss per share (unaudited) $(0.01)—————Weighted average number of shares used in computing

pro forma basic and diluted loss per share (unaudited) 153,589,062—————The accompanying notes are an integral part of the consolidated financial statements.

33

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)

In U.S. dollars (except share data)

Series A TotalConvertible Additional shareholders’

Ordinary Preferred paid-in Accumulated equityshares shares capital deficit (deficiency)

Balance as of 1 January 2002 $9,795 $14,107 $9,944,008 $(8,476,425) $1,491,485

Exercise of options 15 304 49,938 – 50,257Equity component of a

convertible loan – – 75,816 – 75,816Conversion of Preferred B shares into Ordinary Shares 9,417 (9,417) – – –

Net loss – – – (2,091,351) (2,091,351)————— ————— ————— ————— —————

Balance as of 31 December 2002 19,227 4,994 10,069,762 (10,567,776) (473,793)

Equity component of a convertible loan – – 100,835 – 100,835

Net loss – – – (1,871,407) (1,871,407)————— ————— ————— ————— —————

Balance as of 31 December 2003 19,227 4,994 10,170,597 (12,439,183) (2,244,365)

Equity component of a convertible loan – – 91,737 – 91,737

Net loss – – – (1,494,892) (1,494,892)————— ————— ————— ————— —————

Balance as of 31 December 2004 $19,227 $4,994 $10,262,334 $(13,934,075) $(3,647,520)————— ————— ————— ————— —————

The accompanying notes are an integral part of the consolidated financial statements.

34

CONSOLIDATED STATEMENTS OF CASH FLOWS

In U.S. dollars

Year ended 31 December2004 2003 2002

Cash flows from operating activities:Net loss $(1,494,892) $(1,871,407) $(2,091,351)Adjustments to reconcile net loss to net cash used in

operating activities:Depreciation and amortization 32,233 282,099 419,860Loss (gain) on disposal of assets (4,650) – 82,151Accrued interest on convertible loans 250,590 126,920 25,700Decrease (increase) in trade receivables (74,744) 7,034 (15,096)Decrease in other receivables and prepaid expenses 12,713 74,160 45,326Increase (decrease) in trade payables 25,258 (79,429) 67,175Increase (decrease) in accrued expenses and

other liabilities 22,073 (33,167) 246Increase (decrease) in accrued severance pay, net 35,677 22,794 (26,707)

————— ————— —————Net cash used in operating activities (1,195,742) (1,470,996) (1,492,696)

————— ————— —————Cash flows from investing activities:

Changes in restricted cash – 7,177 17Proceeds from sale of property and equipment 4,650 – –Purchase of property and equipment (33,427) (1,499) (7,467)

————— ————— —————Net cash provided by (used in) investing activities (28,777) 5,678 (7,450)

————— ————— —————Cash flows from financing activities:

Exercise of options – – 50,257Equity component of convertible loans 43,101 22,062 4,178Proceeds from convertible loans 1,210,000 1,329,905 1,000,000

————— ————— —————Net cash provided by financing activities 1,253,101 1,351,967 1,054,435

————— ————— —————Increase (decrease) in cash and cash equivalents 28,582 (113,351) (445,711)Cash and cash equivalents at the beginning of the year 112,422 225,773 671,484

————— ————— —————Cash and cash equivalents at the end of the year $141,004 $112,422 $225,773————— ————— —————The accompanying notes are an integral part of the consolidated financial statements.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:– GENERAL

a. TeleMessage Ltd. (“the Company”) was incorporated in Israel in June 1999. The Company developsend-user focused, cross-platform media messaging management systems and applications that enablea PC, browser, mobile phone, personal digital assistant (“PDA”), interactive television (“ITV”) andwire line telephone users to send, receive and manage voice messages, email, SMS, IM and multimedia messaging to any media platform.

The Company has a wholly-owned subsidiary in the U.S., TeleMessage Inc., which is primarilyengaged in sales and marketing.

As of 31 December 2004, the Company employed 23 employees in full and part time jobs.

b. Since inception, the Company has incurred losses from operations and negative cash flows fromoperating activities. As of 31 December 2004, the Company has an accumulated deficit ofapproximately $ 13.9 million and a shareholders deficiency of $ 3.6 million. To date, the Company’soperations have been financed primarily from shareholders loans and equity. The Company will needto obtain additional funds to continue its operations. The Company’s management believes thatsufficient funds will be available from existing or additional investors or other sources to provide thenecessary liquidity to meet the Company’s financing needs.

NOTE 2:– SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with International FinancialReporting Standards (“IFRS”) and have been prepared on a historical cost basis. These financial statementsare the Company’s first IFRS financial statements. The significant accounting policies applied in thefinancial statements, on a consistent basis, are as follows:

a. Functional and presentation currency:

The majority of the Company’s sales are made in non Israeli currencies, mainly the U.S. dollar. Asubstantial portion of the Company’s expenses mainly cost of sales and selling and marketingexpenses are incurred in or linked to U.S. dollars. The financing of the Company is in U.S. dollars.Therefore, the Company has determined that the U.S. dollar is the currency of the primary economicenvironment of the Company, and thus its functional and presentation currency.

Assets and liabilities in or linked to non-U.S. dollar currencies are included in the financial statementsaccording to the representative exchange rate as published by the Bank of Israel on balance sheet date.Transactions in non-U.S dollar currencies are translated at the exchange rate on date of transaction.Translation differences are included in the statement of operations.

Data regarding exchange rates of New Israeli Shekel (“NIS”) and the Great Britain Pound (“GBP”) inrelation to the U.S. dollar are as follows:

Exchange rate of Exchange rate ofAs of one U.S. dollar to NIS one U.S. dollar to GBP

31 December 2004 NIS 4.308 GBP 0.51931 December 2003 NIS 4.379 GBP 0.56231 December 2002 NIS 4.737 GBP 0.623

36

NOTE 2:– SIGNIFICANT ACCOUNTING POLICIES (Cont.)

b. Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly-ownedsubsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.

c. Cash equivalents:

The Company considers short-term unrestricted highly liquid investments that are readily convertibleinto cash, purchased with maturities of three months or less to be cash equivalents.

d. Restricted cash:

Restricted cash deposits are maintained with a bank as security for the lease agreement for theCompany’s office facilities in Israel. The Company is restricted from withdrawing any portion of thedeposit at any time.

e. Trade receivables:

Trade receivables are recognized and carried at the original invoice amount. An estimate for doubtfulaccounts is made when collection of the full amount is no longer probable. As of 31 December 2002,2003 and 2004, the allowance for uncollectible debts was nil.

f. Property and equipment:

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculatedusing the straight-line method over the estimated useful lives of the assets, at the following annualrates:

%

Computers 33Electronic equipment 15-25Furniture and office equipment 7-15Leasehold improvements 10

The carrying values of property and equipment are reviewed for impairment when events or changesin circumstances indicate the carrying value may not be recoverable. If any such indication exists andwhere the carrying values exceed the estimated recoverable amount, the assets are written down totheir recoverable amount. The recoverable amount of the property and equipment is the greater of netselling price and value in use.

g. Other assets:

Other assets represent costs incurred in 1999 in obtaining a patent in the United States. Capitalizedpatent costs are amortized by the straight-line method over eight years, which is the estimatedeconomic life of the Company’s patents.

h. Convertible loans:

Upon the issuance of the convertible loans, the liability and equity components are measuredseparately. The fair value of the liability component is determined using a market rate for anequivalent loan from an unrelated party. The conversion option (equity component) is the residualamount after deducting the fair value of the liability component from the proceeds received uponissuance of the convertible loans.

The liability component, as determined above, is carried as a long-term liability on the amortized costbasis until extinguished on conversion or redemption. The equity component is recognized andincluded in equity. The amount assigned to the conversion option is not changed in subsequent years.

i. Revenue recognition:

The Company generates revenues primarily from licensing its messaging services to serviceproviders, corporations and through OEM and distributors, from hosting and maintenance fees andfrom the use of messaging services by end-customers (such as SMS to Landline).

37

NOTE 2:– SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company recognizes revenues when all of the following criteria are met: persuasive evidence ofan agreement exists, delivery of the product has occurred, the fee is fixed or determinable, no furtherobligations exist and collectibility is probable.

Deferred revenue includes amounts received from customers for which revenue has not yet beenrecognized.

j. Research and development:

Research and development costs are expensed to operations as incurred.

k. Severance pay, net:

Pursuant to Israeli severance pay law, employees who have been employed for more than one year areentitled to one month’s salary for each year of employment or a portion thereof. The Company’sliability for severance pay is calculated based on the most recent salary of the employees multipliedby the number of years of employment, as of the balance sheet date. The Company’s liability for allof its employees is fully provided by monthly deposits with insurance policies and by an accrual.

The value of the deposited funds is based on the cash surrendered value of the insurance policies. Thedeposited funds include profits accumulated up to the balance sheet date. The deposited funds may bewithdrawn only upon the fulfillment of the severance pay obligation, pursuant to Israeli severance paylaw or labor agreements.

Severance pay expense for the years ended 31 December 2002, 2003 and 2004, amounted to $ 10,466,$ 22,284 and $ 43,677, respectively.

l. Income taxes:

The Company accounts for income taxes under the liability method of accounting. Under the liabilitymethod, deferred taxes are provided for temporary differences between the financial statement and taxbases of assets and liabilities at enacted tax rates that will be in effect in the year in which thedifferences are expected to reverse. Deferred tax assets in respect of carryforward losses and othertemporary deductible differences are recognized to the extent that it is probable that they will beutilized.

m. Basic and diluted net loss per share:

Basic loss per share is computed based on the weighted average number of Ordinary sharesoutstanding during the period. Diluted loss per share is computed based on the weighted averagenumber of Ordinary shares outstanding during each period, plus the effect of potential Ordinary sharesconsidered outstanding during the period, except if the effect of such potential Ordinary shares is anti-dilutive.

Pro forma basic and diluted loss per share were computed assuming that all convertible Preferredshares and convertible loans are converted into Ordinary shares as of the beginning of the reportedperiod or on the date of receipt of the loans, if later.

n. Impact of recently issued accounting standards:

In February 2004, the International Accounting Standards Board (“IASB”) issued InternationalFinancial Reporting Standard 2, “Share-Based Payment” (“IFRS 2”), on the accounting for share-based payment transactions, including grants of share options to employees. IFRS 2 requires an entityto recognize the effect of share-based payment transactions in the financial statements based on theawards’ fair value. IFRS 2 will be effective for annual periods beginning on or after 1 January 2005and will apply to grants of shares, share options or other equity instruments that were granted after 7November 2002 and had not yet vested at 31 December 2004. The Company is evaluating the effectof the adoption of IFRS 2 and is presently unable to estimate the effect on the Company’s results ofoperations.

38

NOTE 2:– SIGNIFICANT ACCOUNTING POLICIES (Cont.)

In December 2003, the IASB released revised IAS 32, “Financial Instruments: Disclosure and Presentation”and IAS 39: “Financial Instruments: Recognition and Measurement”. These standards replace IAS 32(revised 2000), and supersedes IAS 39 (revised 2000), and should be applied for annual periods beginningon or after 1 January, 2005. The amendments are not expected to have a material impact on the consolidatedfinancial statements.

In December 2003, as part of the IASB’s project to improve International Accounting Standards, the IASBreleased revisions to the following standards: IAS 1 “Presentation of Financial Statements”; IAS 2“Inventories”; IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”; IAS 10 “EventsAfter Balance Sheet Date”; IAS 16 “Property, Plant and Equipment”; IAS 17 “Leases”; IAS 24 “RelatedParty Disclosures”; IAS 27 “Consolidated and Separate Financial Statements”; IAS 28 “Investment inAssociates”; IAS 31 “Interests In Joint Ventures”; IAS 33 “Earnings per Share”; IAS 40 “InvestmentProperty”. The revised standards should be applied for annual periods beginning on or after 1 January 2005.The amendments are not expected to have a material impact on the consolidated financial statements.

NOTE 3:– OTHER RECEIVABLES AND PREPAID EXPENSES

31 December,2004 2003 2002

Prepaid expenses $32,981 $34,663 $105,438Government authorities 6,749 10,763 14,420Related parties 9,792 16,809 16,537

————— ————— —————$49,522 $62,235 $136,395————— ————— —————

NOTE 4:– PROPERTY AND EQUIPMENT, NET

a. Composition:

31 December,2004 2003 2002

Cost:Computers and peripheral equipment $1,286,938 $1,258,041 $1,256,542Electronic equipment 67,358 67,358 67,358Office furniture and equipment 35,508 35,393 35,393Leasehold improvements 3,757 3,757 3,757

————— ————— —————1,393,561 1,364,549 1,363,050

————— ————— —————Accumulated depreciation:

Computers and peripheral equipment 1,254,489 1,240,698 972,626Electronic equipment 46,726 36,623 26,520Office furniture and equipment 9,349 7,204 5,059Leasehold improvements 1,253 877 501

————— ————— —————1,311,817 1,285,402 1,004,706

————— ————— —————Depreciated cost $81,744 $79,147 $358,344————— ————— —————

b. Depreciation expense amounted to $ 418,457, $ 280,696 and $ 30,830 for the years ended 31December 2002, 2003 and 2004, respectively.

39

NOTE 5:– OTHER ASSETS, NET

31 December,2004 2003 2002

Intangible assets:Patent application expenses $11,223 $11,223 $11,223Accumulated amortization 7,014 5,611 4,209

————— ————— —————$4,209 $5,612 $7,014————— ————— —————

Amortization expense amounted to $ 1,403, $ 1,403 and $ 1,403 for the years ended 31 December 2002,2003 and 2004, respectively.

NOTE 6:– ACCRUED EXPENSES AND OTHER LIABILITIES

31 December,2004 2003 2002

Government authorities $17,960 $– $–Employees and payroll accruals 84,694 82,790 119,257Accrued expenses 37,263 41,106 30,607Deferred revenues 8,550 2,500 9,700

————— ————— —————$148,467 $126,396 $159,564————— ————— —————

NOTE 7:– CONVERTIBLE LOANS

From June 2002 through December 2004, the Company received an aggregate amount of $ 3,540,000 asconvertible loans from a shareholder. Loans in the amount of $ 2,540,000 and accrued interest thereon willbe automatically converted upon the closing of the next financing round of a certain minimum amount, intoPreferred C shares. Loans in the amount of $ 3,540,000 and accrued interest thereon can be converted at anytime, at the lender’s discretion, into Preferred C shares. The conversion price per share is the lower of $0.0282 or the price per share of the next equity round. The loans bear an annual interest rate of 8%,compounded annually. As of 31 December 2004, the accrued interest amounted to $ 403,115. The loans andthe accrued interest, if not converted, are repayable five years after date of receipt, except loans received in2004 in the amount of $ 790,000 which can be repaid anytime upon a written request of the lender up to 5years from the date the loan was received.

The liability component of the convertible loans was recorded based on an effective interest rate of 10%.

NOTE 8:– COMMITMENTS AND CONTINGENT LIABILITIES

a. Charges:

As collateral for the Company’s liabilities to a related party, a floating charge (security interest on theassets of the Company) was placed on the Company’s assets and goodwill. The charge was removedin June 2005.

b. Lease agreements:

The Company leases office facilities and motor vehicles under operating leases for periods of up tothree years, terminating in January 2007.

40

NOTE 8:– COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

Future minimum commitments under non-cancelable operating lease agreements as of 31 December2004 are as follows:

2005 $59,3582006 41,1622007 1,106

—————$101,626—————

Lease expenses for the years ended 31 December 2004, 2003 and 2002 were $ 98,823, $ 162,444 and$ 179,861, respectively.

c. Legal claims:

A supplier filed a claim against the Company in the amount of $ 221,462 for purchasing a storage setfrom the supplier. The Company filed a counter claim in the amount of $ 67,037 against the supplierand ComSec, Vayer and SiLoah for damages, which were caused as a result of receiving a defectivestorage set. The Company’s management is presently unable to estimate the ultimate outcome of theseclaims, and therefore, no provision has been recorded in respect thereof.

NOTE 9:– SHARE CAPITAL

a. Composed of NIS 0.01 par value shares as follows:31 December 2004 31 December 2003 31 December 2002

Issued and Issued and Issued andAuthorised outstanding Authorised outstanding Authorised Outstanding

Number of shares

Ordinary shares 246,500,000 7,854,682 20,846,500 7,854,682 20,846,500 7,854,682Convertible Preferred

A shares 2,153,500 2,056,517 2,153,500 2,056,517 2,153,500 2,056,517Convertible Preferred

C shares 157,500,000 – 13,000,000 – 13,000,000 –————— ————— ————— ————— ————— —————406,153,500 9,911,199 36,000,000 9,911,199 36,000,000 9,911,199————— ————— ————— ————— ————— —————

b. Preferred A shares are convertible into Ordinary shares at any time, at the holders’ discretion, at a ratioof one to 11.58 with respect to 1,864,317 Preferred A shares and one to 70.16 with respect to 192,000Preferred A shares. The Preferred A shares confer upon their holders the right to receive dividends,the right to vote and in addition, priority in distribution of surplus assets upon liquidation or deemedliquidation (as described under the Company’s Articles of Association) of the Company.

c. During June 2002, the Company reclassified the authorized Preferred B shares into Ordinary sharesand converted, on a one to one basis, all of the outstanding Preferred B shares into 5,799,500 Ordinaryshares.

d. Stock Option Plans:

The Company has authorized through its 1999, 2002 and 2004 Incentive Share Option Plans, the grantof options to officers, key employees, directors and consultants of up to 41,938,372 share options forthe Company’s Ordinary shares. The options granted under this Plan are fully vested or vest annuallyover four years from the date of grant, and if not exercised, the options expire on the tenth anniversaryof the date of grant. Any options which are cancelled or forfeited before expiration become availablefor future grants. The total amount of options available for future grant as of 31 December 2004amounted to 5,314,372.

41

NOTE 9:– SHARE CAPITAL (Cont.)

A summary of the Company’s stock option plan activity is as follows:

Year ended 31 December 2004Number of Weighted average

options exercise price

Outstanding at the beginning of the period 749,078 $0.118Granted 35,968,172 $0.002Exercised – $–Forfeited (102,000) $0.06

—————Outstanding at the end of the year 36,615,250 $0.005————— —————Exercisable options 31,905,903 $0.003————— —————

NOTE 10:– TAXES ON INCOME

a. Measurement of taxable income under the Income Tax Law (Inflationary Adjustments), 1985:

Results for tax purposes in Israel are measured in NIS after certain adjustments for changes in theIsraeli Consumer Price Index (“CPI”).

b. Tax benefits under the Law for the Encouragement of Capital Investment, 1959 (“the Law”):

The Company has been granted “Approved Enterprise” status in 2000 for its investment programunder the above Law. The main benefit arising from such status is the reduction in tax rates on incomederived from “Approved Enterprises”. The Company’s income from the “Approved Enterprise” is tax-exempt for a period of four years commencing with the year it first earns taxable income and to areduced tax rate of 10% to 25% for an additional period of three to six years (depending on the levelof foreign investment in the Company beginning from the year that the Company). The period of taxbenefits is subject to limits of 12 years from the commencement of operations, or 14 years from theapproval date, whichever is earlier.

The entitlement to the above benefits is conditional upon the Company fulfilling the conditionsstipulated by the above law, regulations published hereunder and the letters of approval for the specificinvestments in “Approved Enterprises”. In the event of failure to comply with these conditions, thebenefits may be cancelled and the Company may be required to refund the amount of the benefits, inwhole or in part, including interest. Since the Company has incurred losses through 31 December2004, the Company had not utilized any of the aforementioned tax benefits.

If tax-exempt profits are distributed to shareholders they would be taxed at the corporate tax rateapplicable to such profits as if the Company had not elected the alternative system of benefits,currently 25% for an “Approved Enterprise”.

Income from sources other than the “Approved Enterprise” during the benefit period will be subjectto tax at the regular rate prevailing at that time.

A recent amendment to the Law, effective as of 1 April 2005 (the “Amendment”) has significantlychanged the provisions of the Law. The Amendment limits the scope of enterprises which may beapproved by the Investment Center by setting criteria for the approval of a facility as an ApprovedEnterprise, such as provisions generally requiring that at least 25% of the Approved Enterprise’sincome will be derived from export. Additionally, the Amendment enacted major changes in themanner in which tax benefits are awarded under the law so that companies no longer requireInvestment Center approval in order to qualify for tax benefits. However, the law provides that termsand benefits included in any certificate of approval already granted will remain subject to theprovisions of the Law as they were on the date of such approval. Therefore, the Company’s existingApproved Enterprise will not be subject to the provisions of the Amendment.

42

NOTE 10:– TAXES ON INCOME (Cont.)

c. Net operating loss carryforwards:

The Company has carryforward losses for tax purposes as of 31 December 2004, of approximately $7 million. These losses may be carried forward and offset against taxable income in the future for anindefinite period.

As of 31 December 2004, the Company’s subsidiary in the U.S. has a net operating loss carryforwardof approximately $ 4 million which can be utilized for 20 years up to the year 2024. Utilization of theU.S. net operating losses may be subject to substantial annual limitation due to the “change inownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annuallimitations may result in the expiration of net operating losses before utilization.

Since management believes that it is not probable that these tax loss carryforwards will be utilized inthe foreseeable future, no deferred tax assets have been recorded in respect thereof.

d. Reduction in corporate tax rates:

On 29 June 2004, the Israeli Government passed the Amendment to the Income Tax Ordinance (No.140 and Temporary Provision), 2004, which progressively reduces the tax rates applicable tocompanies from 36% to 35% in 2004 to a rate of 30% in 2007.

NOTE 11:– REVENUES BY GEOGRAPHIC AREAS AND MAJOR CUSTOMERS

The Company’s operations are located primarily in Israel.

The Company manages its business on the basis of one reportable segment.

Revenues classified by geographical destinations based on the customer location:

Year ended 31 December2004 2003 2002

Israel $332,728 $16,954 $–U.S.A. 41,435 23,825 81,195Other 34,397 19,500 5,000

————— ————— —————$408,560 $60,279 $86,195————— ————— —————

NOTE 12:– SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF OPERATIONS

a. Cost of revenues:

Year ended 31 December2004 2003 2002

Salaries and related benefits $39,040 $43,047 $75,012On-line services 65,652 74,358 91,254Depreciation 1,504 131,316 167,454Communication 29,186 47,931 14,289Car expenses 12,683 9,078 27,411Overhead expenses 3,052 7,173 18,432Other expenses 18,766 20,712 2,138

————— ————— —————$169,883 $333,615 $395,990————— ————— —————

43

NOTE 12:– SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF OPERATIONS (Cont.)

b. Research and development:

Year ended 31 December2004 2003 2002

Salaries and related benefits $339,009 $227,060 $293,626Depreciation 22,795 90,849 149,057Communication 43,378 14,022 25,602Car expenses 40,784 55,858 70,671Overhead expenses 45,786 57,382 57,341Other expenses 8,573 – 5,941

————— ————— —————$500,325 $445,171 $602,238————— ————— —————

c. Selling and marketing:

Year ended 31 December2004 2003 2002

Salaries and related benefits $420,876 $366,871 $338,039Depreciation 2,852 22,361 16,406Subcontractors 32,035 48,208 6,480Communication 33,593 21,514 8,982Travel and exhibitions 47,469 49,594 36,794Rent 22,107 26,599 19,048Car expenses 9,408 10,966 –Overhead expenses 6,105 14,346 3,293Other expenses 31,869 52,943 30,251

————— ————— —————$606,314 $613,402 $459,293————— ————— —————

d. General and administrative:

Year ended 31 December2004 2003 2002

Salaries and related benefits $184,757 $186,094 $285,422Depreciation 4,763 37,573 87,943Professional fees 85,090 58,295 35,239Rent 1,587 9,119 19,940Overhead expenses 22,078 29,385 30,689Car expenses 12,020 23,467 27,122Other expenses 21,613 37,097 38,288

————— ————— —————$331,908 $381,030 $524,643————— ————— —————

e. Financial expenses, net:

Year ended 31 December2004 2003 2002

Financial expenses:Interest on convertible loans from related party $293,693 $148,982 $29,878Bank interest, foreign currency translation

differences and other 5,979 9,486 83,353————— ————— —————

$299,672 $158,468 $113,231————— ————— —————

44

NOTE 12:– SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF OPERATIONS (Cont.)

f. In the beginning of 2002, the Company closed the operations of the wholly-owned subsidiary inEurope, TeleMessage B.V., which was primarily engaged in marketing. As a result of the closing, theCompany recorded a loss in the amount of $ 82,151.

NOTE 13:– FINANCIAL INSTRUMENTS

a. Fair value of financial instruments:

The carrying amounts of cash and cash equivalents, trade and other receivables, trade and otherpayables approximate their fair value due to the short-term maturity of such instruments.

b. Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consistprincipally of cash and cash equivalents.

Cash and cash equivalents are invested in U.S. dollars and in NIS with a major bank in Israel.Management believes that this bank is financially sound and, accordingly, minimal credit risk existswith respect to these investments.

Sales are derived from customers primarily located in Israel and North America. The Companyperforms ongoing credit evaluations of its customers and to date has not experienced any materiallosses.

NOTE 14:– SUBSEQUENT EVENTS (UNAUDITED)

a. During 2005 the Company received proceeds from a convertible loan in the amount of $ 710,000 froma lender, on the same terms as described in Note 7.

b. On 20 July 2005, all convertible loans received during the years 2002 through 2005 and the accruedinterest were converted into 171,149,565 Preferred C shares.

c. On 20 July 2005, the Company and the shareholders of the Company signed a share purchaseagreement with Messaging International Plc whereby the shareholders of the Company agreed to selltheir entire issued share capital for a consideration of 65,380,000 ordinary shares of MessagingInternational Plc and 25,000,000 warrants to purchase ordinary shares of Messaging International Plcand deferred consideration in accordance with the agreement.

d. On 21 July 2005, all Preferred shares were converted into the Company’s ordinary shares.

45

PART V

PRO FORMA STATEMENT OF NET ASSETS

The following unaudited pro forma statement of net assets of the Group following the acquisition of theSubsidiary and the Placing has been prepared for illustrative purposes only to provide information about theimpact of the acquisition of the Subsidiary and the Placing on the Group and because of its nature may notgive a true reflection of the financial position of the Group. It has been prepared on the basis that theacquisition of the Subsidiary and the Placing were undertaken as at 31 December 2004 and on the basis setout in the notes:

Adjustments––––––––––––––––––––––––––––––––––––––

The TeleMessage PlacingCompany Limited Capitalisation proceeds and

As at As at of acquisition of Pro forma31 December 31 December convertible TeleMessage net assets

2004 2004 loans Limited of the(note 1) (note 2) (note 3) (note 4) Group

£ £ £ £ £

Non current assets – 106,463 – 7,718,713 7,825,176————— ————— ————— ————— —————

Current assetsCash 25,002 73,443 – 1,175,000 1,273,445Other current assets – 68,924 – – 68,924

————— ————— ————— ————— —————25,002 142,367 – 1,175,000 1,342,369

————— ————— ————— ————— —————Total assets 25,002 248,830 – 8,893,713 9,167,545

————— ————— ————— ————— —————Current liabilities

Convertible loans – (390,136) 390,136 – –Other current liabilities – (109,548) – – (109,548)

————— ————— ————— ————— —————– (499,684) 390,136 – (109,548)

————— ————— ————— ————— —————Non-current liabilities

Convertible loans – (1,560,001) 1,560,001 – –Other non-current liabilities – (88,995) – – (88,995)

————— ————— ————— ————— —————– (1,648,996) 1,560,001 – (88,995)

————— ————— ————— ————— —————Total liabilities – (2,148,680) 1,950,137 – (198,543)

————— ————— ————— ————— —————Net assets (liabilities) 25,002 (1,899,850) 1,950,137 8,893,713 8,969,002————— ————— ————— ————— —————Notes:

The unaudited pro forma statement of net assets has been prepared on the following basis:

1. The net assets of the Company at 31 December 2004 have been extracted from the financialinformation set out in Part IIIB of this document.

Adjustments:

2. The net assets of TeleMessage Ltd. at 31 December 2004 have been extracted from the financialinformation set out in Part IV of this document. The amounts have been converted into £ Sterling atthe exchange rate prevailing on 31 December 2004.

3. Prior to completion of the acquisition of TeleMessage Ltd., the convertible loans in TeleMessageLtd.’s balance sheet were converted into Series C Preferred Shares in TeleMessage Ltd. Theadjustment is based on the amount outstanding at 31 December 2004 and the actual amount convertedis likely to be different.

46

4. This adjustment represents the gross proceeds of the Placing of £1.5m less estimated expenses of£325,000 and the acquisition of TeleMessage Ltd. Goodwill arising on the acquisition has beencapitalised and is calculated as follows:

£

Cost of acquisition 7,769,000TeleMessage Ltd.’s net liabilities at 31 December 2004 1,899,850Convertible loans capitalised (1,950,137)

—————Pro forma goodwill 7,718,713—————a) The cost of the acquisition is based on the initial consideration of 65,380,000 ordinary shares of

0.5p each of the Company plus the maximum amount of the deferred consideration of 90,000,000ordinary shares of 0.5p each of the Company multiplied by the Issue Price of 5p.

b) TeleMessage Ltd.’s net liabilities at 31 December 2004 have been adjusted for the conversion ofthe convertible loan stock into Series C Preferred Shares in TeleMessage Ltd. which occurredprior to completion of the acquisition.

c) No adjustments have been made to reflect any fair value adjustments to TeleMessage Ltd.’s netassets.

5. No adjustments have been made to reflect the trading results of the Company or of TeleMessage Ltd.since 31 December 2004.

47

PART VI

TERMS AND CONDITIONS OF THE WARRANTS

Warrant Instrument

Details of Warrantholders are set out in paragraph 4 of Part VII

1. Constitution

The Warrants are constituted by the Warrant Instrument. The terms and conditions of the Warrantscontained in the Warrant Instrument are as follows.

2. Subscription Rights

Each Warrant entitles the holder to subscribe for one Ordinary Share at the Issue Price exercisable onor before the earliest of (i) 23 May 2010 or (ii) subject to certain exceptions where a surplus wouldbe available for distribution amongst the holders of Ordinary Shares, on the winding up of theCompany (“the Final Subscription Date”). Subject to this the Warrantholder is entitled to participatein all dividends and other distributions in respect of the then current financial period of the Companypari passu in all respects with the Ordinary Shares in issue on the relevant subscription date.

It is the intention of the Company to apply for the Ordinary Shares allotted pursuant to the exerciseof a Warrant to be admitted to dealing on AIM and the Company will use all reasonable endeavoursto obtain the grant of admission not later than 14 days after the date of allotment.

3. Adjustments and Takeovers

If at any time or times before the Final Subscription Date:

3.1 the Company undertakes an Issue or Reorganisation (as defined in the Warrant Instrument),adjustments shall be made to the conditions governing the Warrants or the Subscription Price(provided that fractional entitlements shall be ignored and any adjustment shall not reduce theSubscription Price below the nominal value of an Ordinary Share) as the Auditors (as definedin the Warrant Instrument) shall determine and state to be fair and reasonable in all thecircumstances;

3.2 the Company makes any offer or invitation to all Ordinary Shareholders (whether by rightsissue, open offer or otherwise), or any offer or invitation is made to such holders otherwise thanby the Company (not being a Takeover Offer (as defined in the Warrant Instrument)), then theCompany shall, or so far as it is able, procure that at the same time an appropriate offer orinvitation is made to the Warrantholders, then adjustments shall be made as in paragraph 3.1above and any such adjustment shall become effective as at the date of or, as the case may be,the record date for the offer or invitation;

3.3 notwithstanding paragraph 3.2 above but subject to certain other provisions of the Warrantinstrument, if a Takeover Offer is made at any time or times before the Final Subscription Date,the Company shall give notice of the Takeover Offer to the Warrantholders at the same time asnotice of the Takeover Offer is provided to the Ordinary Shareholders. The Company shall useits reasonable endeavours to procure that an appropriate offer is extended to the Warrantholdersas if all outstanding Subscription Rights had been exercised immediately before the record datefor that Takeover Offer on the terms then applicable. However, if the Company cannot procuresuch offer is made to the Warrantholders then adjustments shall be made as in paragraph 3.1above and any such adjustment shall become effective as at the date of or, as the case may be,the record date for the Takeover Offer.

48

4. Winding Up

If an order is made or an effective resolution of the Company passed for the winding up of theCompany, except on terms sanctioned by an extraordinary meeting of the Shareholders in which casethe Company shall use its reasonable efforts to procure that the Warrantholder be granted a substitutewarrant of equivalent value), each Warrantholder shall be treated as if immediately before the orderor resolution the Subscription Rights had been exercised in full and accordingly each Warrantholdershall rank pari passu with the holders of Ordinary Shares and shall be entitled to receive such sum(less the aggregate Subscription Price) he would otherwise have received out of the assets available inthe liquidation).

5. Restrictions on the Company

Save with the sanction of an extraordinary resolution of the holders of the Warrants or the consent inwriting of the Warrantholders entitled to not less than three quarters of the Ordinary Shares the subjectof the Warrants, the Company shall, whilst any Warrant remains outstanding:

5.1 not make any distribution of capital reserves (except by means of a capitalisation issue in theform of fully paid Ordinary Shares following which adjustments shall be made in accordancewith the provisions summarised in paragraph 3 above);

5.2 not modify the rights attaching to the Ordinary Shares or create or issue any new class of equityshare capital which carries rights as regards voting, dividend or return of capital morefavourable than those attaching to the Ordinary Shares;

5.3 procure that no issued capital or other securities shall be converted into any (other) class ofshare capital;

5.4 if it makes an offer or invitation to the Ordinary Shareholders (as defined in the WarrantInstrument) for the purchase by the Company of any of its shares, the Company shallsimultaneously give notice thereof to the Warrantholders and the Warrantholders shall beentitled, at any time whilst such offer or invitation is open for acceptance, to exercise theirsubscription rights so as to take effect as if they had exercised their rights immediately prior tothe record date of such offer or invitation;

5.5 not make any issue or grant any rights, options or warrants to subscribe for Ordinary Shares orissue any securities convertible into or exchangeable for Ordinary Shares if the effect would bethat on the exercise of the Subscription Rights the Company would be required to issueOrdinary Shares at a discount;

5.6 procure that there shall be no compromise or arrangement affecting the Ordinary Shares unlessthe Warrantholders shall be treated as a separate class of members of the Company and shallbe party to such compromise or arrangement; and

5.7 keep available sufficient authorised but unissued share capital to satisfy in full all SubscriptionRights remaining exercisable without the need for the passing of any resolution of theCompany.

6. Variation of rights

All or any rights attaching to the Warrants may only be altered or abrogated with the sanction of anextraordinary resolution of the Warrantholders.

7. Transfers and Transmission

Warrants will be registered and transferable.

The executor or administrator of a deceased Warrantholder (or the survivor or survivors where aWarrantholder was a joint holder), the guardian of an incompetent Warrantholder or the trustee of abankrupt Warrantholder shall be the only person recognised by the Company as having any title to his

49

Warrant. In order to be registered as the Warrantholder, such a person must produce such evidence asmay reasonably be required by the Directors.

8. Accounts

Each Warrantholder will be sent, for information purposes only, concurrently with the issue of thesame to the holders of Ordinary Shares a copy of each published annual report and accounts orsummary financial statement of the Company.

9. Representation

A Warrantholder shall have the right to receive notice of all general meetings of the Company but shallonly be entitled to attend and speak at any such general meeting where the business of the meetingincludes, inter alia, a resolution that the Company be wound up summarily (voluntarily), to alter orabrogate the rights attached to any of the shares of the Company, to authorise, create or increase theamount of any share ranking in priority to the Ordinary Shares the subject of the Warrants, or to doany other thing which may give rise to an adverse change or infringement of the rights of theWarrantholder.

The Warrantholder(s) shall not be deemed to be (a) member(s) of the Company.

50

PART VII

ADDITIONAL INFORMATION

1 The Company

1.1 The Company was incorporated and registered in England and Wales on 12 August 2004 under theCompanies Act 1985 as a public company limited by shares with the name RTI Eighteen plc and withregistration number 05204176. By a resolution passed on 24 May 2005, the Company changed itsname to Telemessage International plc. By a resolution passed on 12 July 2005, the Company changedits name to Messaging International Plc. On 6 June 2005 the Company obtained a trading certificatepursuant to section 117 of the Act.

1.2 The principal legislation under which the Company operates is the Act and the regulations madethereunder. The liability of the members of the Company is limited.

1.3 The principal legislation under which the Subsidiary operates is the Companies Law of 1999 of theState of Israel.

1.4 The Company’s registered office is at 58-60 Berners Street, London, W1T 3JS and its head office andprincipal place of business is at 8 Granit Street, Kiryat Arie, Petach Tikva 49222, PO Box 3668, Israel.

1.5 The Company’s telephone number is +972(3) 922 5252.

2 Subsidiaries

2.1 The Company is the ultimate holding company for the following subsidiaries:

Date of Place ofCompany Incorporation Incorporation Activity

TeleMessage Ltd.(1) 13 June 1999 Israel TradingTeleMessage Inc.(2) 13 March 2000 USA Trading

(1) Wholly owned by the Company

(2) Wholly owned by the Subsidiary

2.2 The Subsidiary previously was the holding company of TeleMessage BV, a company incorporated inthe Netherlands. TeleMessage BV was struck off the register in the Netherlands in 2004.

3 Share Capital

3.1 At the date of incorporation, the authorised share capital of the Company was £1,000,000 divided into1,000,000 shares of £1 each, two of which were issued credited as fully paid to the subscribers to theCompany’s memorandum of association and one of which was subsequently transferred to RTI andone of which was transferred jointly to RTI and Geoffrey Simmonds.

3.2 On 24 May 2005, the authorised share capital of the Company was increased from £1,000,000 to£4,000,000 by the creation of 3,000,000 ordinary shares of £1 each and subsequently each issued andunissued ordinary share of £1 were sub-divided into 200 shares of 0.5p each

3.3 On 23 September 2004, 99,998 ordinary shares of £1 each in the capital of the Company were issuedand allotted to RTI, at par value as to one quarter paid up (in aggregate of £24,999.50). On 24 May2005, RTI paid up the outstanding amount due in respect of such shares, being £74,998.50. Suchordinary shares of £1 each together with the new subscriber shares registered in the name of RTI wereby the resolution referred to in paragraph 3.2 subsequently sub-divided in aggregate into 20,000,000ordinary shares of 0.5p each.

3.4 On 20 July 2005 the Company entered into the Share Purchase Agreement pursuant to which65,380,000 Ordinary Shares were issued to the Vendors, further details of which are set out inparagraph 11.4 of this Part VII.

51

3.5 On 24 May 2005 by or pursuant to resolutions of the Company passed on that date:

3.5.1 the Directors were generally and unconditionally authorised pursuant to section 80 of the Act toexercise all and any powers of the Company to allot relevant securities (as defined in section 80of the Act) up to an aggregate nominal amount equal to £1,900,000. The authority expires (unlesspreviously renewed, varied, or revoked by the Company in general meeting) at the earlier of theconclusion of the annual general meeting of the Company following the passing of the resolutionand 15 months from the date of the resolution. The Company may, at any time prior to the expiryof the authority, make an offer or agreement which would or might require relevant securities tobe allotted after expiry of the authority and the Directors may allot relevant securities inpursuance of such an offer or agreement as if the authority had not expired; and

3.5.2 the Directors were given power pursuant to section 95 of the Act (with such power expiring atthe same time as the authority referred to in paragraph 3.5.1 above (the “Section 80 Authority”)to allot equity securities (as defined in section 94(2) of the Act) for cash pursuant to the Section80 Authority as if section 89(1) of the Act did not apply to any such allotment save that thepower was limited to:

(a) the allotment of equity securities pursuant to a rights issue or equivalent offers; and

(b) (otherwise than pursuant to the above) allotment for cash of equity securities up to anaggregate nominal amount of £1,900,000.

3.6 The Company’s authorised and issued share capital at the date of this document and as it will beimmediately following the Placing and Admission are and will be as follows:

At the date of this document On AdmissionNumber of Number of

Ordinary OrdinaryAmount Shares Amount Shares

Authorised £4,000,000 800,000,000 £4,000,000 800,000,000Issued and fully paid £426,900 85,380,000 £576,900 115,380,000

3.7 On incorporation the Company had 999,998 shares unissued, as at 31 December 2004 the Companyhad the same number of unissued shares. Further details of the history of the share capital of theCompany can be found in this paragraph 3. Save for the issue of Ordinary Shares under the SharePurchase Agreement, the Company has not used more than 10 per cent. of the issued share capital forthe purchase of assets other than cash during the period.

3.8 There are no shares in the Company which are held by, or on behalf of, the Company and none of theCompany’s subsidiaries holds any shares in the Company.

3.9 Other than set out in paragraphs 4 and 12 of this Part VII, no person has any rights or obligations topurchase the authorised but unissued capital of the Company and no person has been given anundertaking by the Company to increase its authorised capital.

3.10 The International Security Identification Number for the Ordinary Shares is GBOOBODR6985 andfor the Warrants is GBOOBODR9997.

3.11 Save as set out in this document there are no options existing or agreed conditionally orunconditionally over the capital of the Company or any of the subsidiaries of the Company.

3.12 On completion of the Placing, the issued share capital of the Company shall be increased by 35 percent. resulting in an immediate dilution of 26 per cent.

4 Warrants

4.1 On 24 May 2005 the Company constituted the Warrant Instrument in respect of 100,000,000 Warrantsto subscribe for Ordinary Shares at 5 pence per Ordinary Share. One Warrant will be issued for every

52

three Ordinary Shares subscribed pursuant to the Placing thus resulting in the issue of 10,000,000Warrants pursuant to the Placing. The Warrants are exercisable at 5 pence per Ordinary Share at anytime until the earlier of 23 May 2010 or the date on which the warrants lapse pursuant to the terms ofthe Warrant Instrument.

4.2 On 24 May 2005, 10,000,000 Warrants were issued to Reverse Take-Over Investments plc.

4.3 On 20 July 2005 an aggregate of 25,000,000 Warrants were issued to the Vendors pursuant to theterms of the Share Purchase Agreement, further details of which are set out in paragraph 11.4 of thisPart VII.

4.4 On Admission Seymour Pierce will receive 5,000,000 Warrants.

4.5 The number of issued Warrants at the date of this document and as it will be immediately followingthe Placing and Admission (assuming full subscription under the Placing) are and will be as follows:

At the date of this document On Admission

Authorised Number Issued Numberof Warrants of Warrants

Current 100,000,000 35,000,000On Admission 100,000,000 50,000,000

4.6 The main terms of the Warrants are set out in Part VI of this document.

5 Memorandum and Articles of Association

Memorandum of Association

5.1 The objects of the Company are set out in full in clause 4 of its Memorandum of Association andinclude the carrying on of business as a general commercial company.

Articles of Association

5.2 The Articles of Association of the Company (the “Articles”) which were adopted pursuant to aresolution of the Company passed on 12 July 2005 contain provisions, inter alia, to the followingeffect:

5.2.1 Share Capital

The Company may by ordinary resolution:

(i) increase its share capital by such sum to be divided into shares of such amounts as theresolution shall prescribe;

(ii) consolidate its share capital into shares of larger amounts than its existing shares;

(iii) cancel any shares which have not been taken at the date of the passing of the resolution,or agreed to be taken, by any person and diminish the amount of its share capital by theamount of the shares so cancelled;

(iv) sub-divide its shares, or any of them, into shares of smaller amounts than is fixed by theMemorandum of Association of the Company

The Company may by special resolution reduce its share capital and any capitalredemption reserve and any share premium account in any manner subject to theprovisions of the Act. The Company may issue shares which are to be redeemed or areliable to be redeemed at the option of the Company or the shareholders. Subject to theprovisions of the Act and the rights of holders of any class of shares, the Company maypurchase its own shares, including redeemable shares.

53

5.2.2 Voting

Subject to any special terms as to voting upon which any shares for the time being may be held,on a show of hands every member who (being an individual) is present in person or by proxynot being himself a member or (being a corporation) is present by its duly appointedrepresentative shall have one vote, and on a poll every member present in person, or byrepresentative, or proxy, shall have one vote for every share in the capital of the Company heldby him. A proxy need not be a member of the Company. Where, in respect of any shares, anyregistered holder or any other person appearing to be interested in such shares fails to complywith any notice given by the Company under Section 212 of the Act, then not earlier than 14days or 28 days if a member has a holding of less than 0.25 per cent. of any class of shares afterservice of such notice, the shares in question may be disenfranchised.

5.2.3 AGM & EGM Procedures

The Company shall in each year hold a general meeting as its annual general meeting inaddition to any other meetings in that year and not more than 15 months shall elapse betweenthe date of one annual general meeting of the Company and that of the next. Subject to theprovisions of the Act, the annual general meeting shall be held at such time and place as theDirectors may determine.

The Board may convene an extraordinary general meeting whenever it thinks fit. Anextraordinary general meeting shall also be convened on such requisition, or in default may beconvened by such requisitionists, as provided by Section 368 of the Act. At any meetingconvened on such requisition or by such requisitionists no business shall be transacted exceptas stated by the requisition or proposed by the Board.

Subject to the provisions of the Act, an annual general meeting and a general meeting for thepassing of a special resolution shall be called by at least twenty one clear days notice, and allother general meetings shall be called by at least fourteen clear days notice.

Shorter notice than that specified above may be deemed to have been given in the case of anannual general meeting by all the members entitled to attend and vote at the meeting; and inthe case of any other meeting, by a majority number of the members having a right to attendand vote at the meeting, being a majority together holding not less than 95 per cent. in nominalvalue of the shares giving that right.

5.2.4 Dividends

The Company may by ordinary resolution in general meeting declare dividends provided thatthey shall be paid in accordance with the Act and out of profits available for distribution andshall not exceed the amount recommended by the Directors. The Directors may from time totime pay such interim dividends as appear to the Directors to be justified by the profits of theCompany and are permitted by the Act.

Subject to the rights of persons, if any, holding shares with special dividend rights, and unlessthe terms of issue otherwise provide, all dividends shall be apportioned and paid pro rataaccording to the amount paid or credited as paid on the shares during any portion or portionsof the period in respect of which the dividend is payable. Amounts paid or credited as paid inadvance of calls shall not be regarded as paid on shares for this purpose.

All unclaimed dividends may be invested or otherwise made use of by the Directors for the benefitof the Company until claimed. All dividends unclaimed for a period of 12 years after having beendeclared shall, if the Directors so resolve, be forfeited and shall revert to the Company.

Where, in respect of any shares, any registered holder or any other person appearing to beinterested in the shares of the Company fails to comply with any notice given by the Companyunder Section 212 of the Act, then, provided that the shares concerned represent at least 0.25per cent. in nominal value of the issued shares of the relevant class, the Company may withholddividends on such shares.

54

There is no fixed date on which an entitlement to a dividend arises.

5.2.5 Variation of Rights

All or any of the special rights for the time being attached to any class of shares for the timebeing forming part of the capital of the Company may, subject to the provisions of the Act, bevaried or abrogated either:

(a) in such manner (if any) as may be provided by such rights; or

(b) in the absence of any such provision, with the consent in writing of the holders of threequarters in nominal value of the issued shares of that class, or with the sanction of anextraordinary resolution passed at a separate general meeting of the holders of the sharesof that class, but not otherwise. To every such meeting all the provisions of the Articlesof Association of the Company relating to general meetings or to the proceedings thereatshall, so far as applicable and with the necessary modifications, apply, except that thenecessary quorum at any such meeting (other than an adjourned meeting) shall be twopersons at least, holding or representing by proxy at least one third in nominal value ofthe issued shares of the class in question and that any holder of shares of the class inquestion present in person or by proxy may demand a poll.

5.2.6 Transferability

Transfers of Ordinary Shares, which are in registered form, shall be effected in the mannerauthorised by the Stock Transfer Act 1963. The instrument of transfer shall be signed by or onbehalf of the transferor and (except in the case of fully paid shares) by or on behalf of thetransferee. The Directors may decline, without giving any reason, to recognise any instrumentof transfer unless:

(i) the instrument of transfer (duly stamped) is deposited at the Company’s registered officeaccompanied by the share certificate for the shares to which it relates and such otherevidence as the Directors may reasonably require showing the right of the transferor tomake the transfer;

(ii) the instrument of transfer is in respect of only one class of share;

(iii) the instrument of transfer is in favour of not more than four transferees; and

(iv) the instrument of transfer is in respect of a share in respect of which all sums presentlypayable to the Company have been paid.

Where, in respect of any shares, any registered holder or any person appearing to be interestedin such shares fails to comply with any notice given by the Company under Section 212 of theAct, then, provided that the shares concerned represent at least 0.25 per cent. in nominal valueof the issued shares of the relevant class, the Company may prohibit transfers of such shares oragreements to transfer any of such shares.

5.2.7 Directors of the Company

Unless otherwise determined by ordinary resolution, the number of directors (other thanalternative directors) shall be not less than two and not more than eight. Subject to certainexceptions, a Director shall not vote (or be counted in the quorum) in respect of any contractor arrangement or any other proposal whatsoever in which he has any material interest and, ifhe shall do so, his vote shall not be counted.

The directors may meet together for the dispatch of business, adjourn and otherwise regulatetheir meetings as they think fit. The quorum necessary for the transaction of the business of thedirectors may be fixed by the directors, and unless so fixed at any other number shall be two.

55

Questions arising at any meeting shall be determined by a majority of votes. In case of anequality of votes the chairman of the meeting shall have a second or casting vote. A directorwho is unable to attend any meeting of the directors and has not appointed an alternate directormay authorise any other director to vote for him at the meeting, and in that event the directorso authorised shall have a vote for each director by whom he is so authorised in addition to hisown vote.

It shall not be necessary to give notice of a Board meeting to a Director who is absent from theUnited Kingdom unless he has requested the Board in writing that notices of Board meetingsshall during his absence be given to him at any address in the United Kingdom.

Any Director or his alternate may validly participate in a meeting of the Board or a committeeof the Board through the medium of conference telephone or any other form ofcommunications equipment.

The directors may delegate any of their powers to committees consisting of at least one memberof their body as they think fit, provided that at least one half of the members of any suchcommittee shall be directors of the Company and no resolution of a committee shall beeffective unless at least half of those present when it is passed are Directors or alternateDirectors. Any committee so formed shall in the exercise of the powers so delegated conformto any regulations that may be imposed on it by the directors. The meetings and proceedings ofany such committee consisting of two or more directors shall be governed by the provisions ofthese Articles regulating the meetings and proceedings of the directors, so far as the same areapplicable and are not superseded by any regulations imposed by the directors under thisArticle

Any remuneration paid for the services of the Directors, as fixed by the Company in generalmeeting, may be divided between the Directors as they shall agree or, failing agreement,equally and shall be deemed to accrue from day to day. The Company may remunerate aDirector who serves on any committee or devotes special attention to the business of theCompany, or who otherwise performs services which in the opinion of the Directors are outsidethe scope of the ordinary duties of a Director, by way of salary, lump sum, percentage of profitsor otherwise as the Directors may determine.

At each annual general meeting of the Company, one-third of the Directors who are subject toretirement by rotation or, if their number is not three or a multiple of three, the number nearestto but not exceeding one-third, shall retire. A retiring Director is eligible for re-election.

Each Director (other than an alternate director) may appoint another Director or (subject to theapproval of a majority of the Directors) any other person to be an alternate director of theCompany, and may at any time remove an alternate director so appointed by him from officeand, subject to any requisite approval, appoint another person in his place.

The Company may purchase and maintain for any Director insurance against any liabilitywhich by virtue of any law would otherwise attach to him in respect of any negligence, default,breach of duty or breach of trust of which he may be guilty in relation to the Company.

5.2.8 Borrowing Powers

The Directors may exercise all the powers of the Company to borrow money and to mortgageor charge its undertaking, property, assets and uncalled share capital, and (subject to the Act)to issue debentures and other securities, whether outright or as collateral security for any debt,liability or obligation of the Company or of any third party. The Directors shall restrict theborrowings of the Company and its subsidiaries so as to ensure that the aggregate of theamounts borrowed by the Company and all its subsidiaries and remaining outstanding at anytime shall not without previous sanction of an ordinary resolution of the Company exceed anamount equal to the greater of either four times the aggregate of the nominal amount of the paidup share capital of the Company and the amount shown as standing to the credit of its capital

56

and revenue reserves as defined in the Articles but excluding certain amounts as defined thereinor £10,000,000.

5.2.9 Distribution of assets on liquidation

If the Company shall be wound up, the liquidator may, with the sanction of an extraordinaryresolution of the Company or any other sanction required by the Act, divide amongst themembers in specie or in kind the whole or any part of the assets of the Company, those assetsto be set at such values as he deems fair. The liquidator may also vest the whole or part of theassets of the Company in trustees on trust for the benefit of the contributories.

5.2.10 Uncertificated Shares

The Directors may implement such arrangements as they think fit in order for any class ofshares to be held, evidenced and transferred in uncertificated form. The Company will not berequired to issue a certificate to any person holding shares in uncertificated form.

6 Directors’ and Other Interests

6.1 The interests of the Directors (all of which are beneficial) in the issued share capital of the Companyand in the Warrants as at the date of this document and following the Placing (assuming fullsubscription thereunder) such interests being those which are required to be notified by each Directorto the Company under the provisions of section 324 or 328 of the Act or which are required to beentered in the register of interests required to be maintained pursuant to section 325 of the Act orwhich are interests of persons connected with the Director within the meaning of section 346 of theAct, the existence of which is known or which could, with reasonable diligence, be ascertained by aDirector are and will be as follows:

The date of this document On AdmissionOrdinary Shares Warrants Ordinary Shares Warrants

Number % Number Number % Number

Horacio Furman(1) 54,171,231 63.4 20,329,678 54,171,231 46.9 20,329,678Guy Levit(2) 4,387,608 5.1 1,828,170 4,387,608 3.8 1,828,170Irvin Fishman nil 0 nil nil 0 nilGeoffrey Simmonds(3) 200 0.001 nil 200 0.001 nilDavid Rubner(4) 288,512 0.34 120,213 288,512 0.25 120,213

(1) Horacio Furman’s holding consists of the 34,492,934 Ordinary Shares and the 14,372,054 Warrants held by PridewayHoldings Ltd (a company of which he is CEO and a major shareholder) and the 19,678,297 Ordinary Shares and the5,957,624 Warrants held by Prideway II LP (a limited partnership of which he is a limited partner).

(2) Guy Levit’s holding includes the Ordinary Shares and Warrants which are held by Guy Levit Ltd, a company of whichhe is the sole director and shareholder.

(3) Geoffrey Simmonds holds these shares jointly with RTI and is a minority shareholder and a director of Westside anda director of RTI, which has an interest in 20,000,000 Ordinary Shares and 10,000,000 Warrants at the date of thisdocument. These Ordinary Shares and Warrants have not been included in the above table.

(4) David Rubner’s holding is held through Rubner Technology Ventures Ltd, a company of which he is a director and amajor shareholder.

6.2 Guy Levit and David Rubner have been granted the following options pursuant to the terms of theUnapproved Share Option Scheme (a summary of which is set out at paragraph 12 of this Part VII) asfollows:

Number ofOrdinary Shares

Exercise subject to ExerciseDirector Date of Grant Price option Period

Guy Levit 20/07/2005 5p 20,266 20/07/2005 to 07/06/201020/07/2005 2.17p 1,555 20/07/2005 to 15/11/2011

David Rubner 20/07/2005 5p 500,000 20/07/2006 to 20/07/2015

57

6.3 Save as disclosed in paragraph 6.2, none of the Directors have been granted any options.

7 Substantial Shareholders

7.1 Save as disclosed in paragraph 6.1 above, at the date of this document as far as the Directors areaware, the only persons who are directly or indirectly interested in 3 per cent. or more of the issuedOrdinary Shares of the Company and/or Warrants are as follows:

% of issuedNumber of Number of Ordinary Share

Name Ordinary Shares Warrants Capital*

Gil Shapira 4,387,608 1,828,170 5.14%RTI 20,000,000 10,000,000 23.42%Prideway Holdings Ltd 34,492,934 14,372,054 40.4%Prideway II L.P. 19,678,297 5,957,624 23.05%

*assuming the Warrants and options have not been exercised and assuming the Deferred Consideration not having been issuedand allotted.

7.2 Following the Placing and Admission, exercise of the Warrants and options in full and assuming themaximum issue of new Ordinary Shares as Deferred Consideration to the Vendors, it is believed thatthe following persons will be interested in 3 per cent. or more of the issued Ordinary Share capital ofthe Company:

% of issuedNumber of Ordinary Share

Name Ordinary Shares Capital*

Guy Levit 12,819,011 5.0%Gil Shapira 12,819,011 5.0%RTI 30,000,000 11.7%Prideway Holdings Ltd 100,604,384 39.1%Prideway II L.P. 47,083,367 18.3%

*assuming the Warrants and options have been exercised and assuming all the Deferred Consideration Shares have beenissued and allotted.

7.3 Save as disclosed in this paragraph 7, and in so far as the Company has the information, the Directorsare not aware of any person or persons who either alone or, if connected jointly following thecompletion of the Placing will (directly or indirectly) exercise or could exercise control over theCompany.

8 Additional Information on the Directors

8.1 Other than directorships of Group companies, the Directors have held the following directorships orbeen partners in the following partnerships within the five years prior to the date of this document:

Director Current Past

Horacio Furman Prideway II L.P Better T.V. Technologies Ltd.Prideway Holdings Ltd.Picom Software Systems Ltd.Arba Finance Company Ltd.

Guy Levit Guy Levit Ltd (Israel) None

Irvin Fishman Boom Boom Limited HEDD.NET LimitedCarrington Productions musicinmind.com plc

International LimitedClipper Films LimitedDOT Films LimitedEntertainment Rights Distribution

Limited

58

Director Current Past

Irvin Fishman (cont) Entertainment Rights PlcLavender Castle LimitedMusical Tunes LimitedRidgeway Films LimitedSeer Magic LimitedSiriol LimitedThe Richard Digance Card

Company LimitedThe Sleepy Kid Company LimitedThe Tidings Trading Co LimitedTransylvania Pets LimitedAuerbach Hope (Chartered

Accountants)

Geoffrey Simmonds ADDleisure plc Cheerful Scout PlcAvonlaw Limited MMS Group LimitedDenavon Investments Limited Targeted Media for Marketing Footballdirectory.co.uk Limited (Europe) LimitedFootball Enterprises LimitedFootball Partners LimitedReverse Take-Over Investments plcRTI Twenty plcSimmonds & CoSoccer Enterprises LimitedTAF Trading LimitedThe Elms Group LimitedWestside Acquisitions plcWestside Investments LimitedWestsidetech LimitedWestside Sports LimitedYork Pharma Plc

David Rubner Check Point Software Ltd. ECI Telecom Ltd.Koor Industries Ltd. ECtel Ltd.Elbit Imaging Ltd. Efcon Ltd.Limpan Electronic Jigami Corporation

Engineering Ltd. Allcharge.com Inc.cVidya Networks I.I.S. Intelligent InformationBamboo MediaCasting Inc. Systems Ltd.Bar Ilan University Cello-net Interactive MobileShaare Zedek Hospital Commerce LtdFubner Technology Ventures Ltd Multimedia K.I. Inc.Hyperion Israel Advisors Ltd.

8.2 Save as disclosed in this document, none of the Directors have:

8.2.1 any unspent convictions in relation to indictable offences;

8.2.2 had any bankruptcy order made against him or entered into any voluntary arrangements;

8.2.3 been a director of a company which has been placed in receivership, compulsory liquidation,administration, been subject to a voluntary arrangement or any composition or arrangementwith its creditors generally or any class of its creditors, whilst he was a director of that companyor within the 12 months after he had ceased to be a director of that company;

8.2.4 been a partner in any partnership which has been placed in compulsory liquidation,administration or been the subject of a partnership voluntary arrangement, whilst he was apartner in that partnership or within the 12 months after he ceased to be a partner in thatpartnership;

59

8.2.5 been the owner of any asset which has been placed in receivership or a partner in anypartnership which has been placed in receivership whilst he was a partner in that partnership orwithin the 12 months after he ceased to be a partner in that partnership;

8.2.6 been publicly criticised by any statutory or regulatory authority (including recognisedprofessional bodies); or

8.2.7 been disqualified by a court from acting as a director of any company or from acting in themanagement or conduct of the affairs of a company.

8.3 In or around April 2000, David Rubner invested in Cello-net Interactive Mobile Commerce Ltd (anIsraeli registered company ) (“Cello-net”) and joined its board. At the beginning of 2001, afterCello-net failed to raise additional funds, Golden Gate, a venture capital lender to whom Cello-netowed approximately US$700,000 applied to the Court to appoint a receiver. Cello-net had additionaldebts of approximately US$300,000. David left the board a few weeks before Cello-net went intoreceivership.

8.4 Geoffrey Simmonds was a director of Design Furniture Limited and its subsidiaries, Design Furniture(Manufacturing) Limited, Design (Module) Limited and Design Furnishing Contracts Limited until20 June 1979. Receivers were appointed in respect of the group on 7 January 1980 and 22 January1980 and a deficiency of approximately £660,000 was identified.

8.5 Save as disclosed in this document, no Director has or has had any interest in any transaction whichis or was significant in relation to the business of the Group and which was effected during the currentor immediately proceeding financial period or which was effected during an earlier financial periodand remains outstanding or unperformed.

8.6 The Directors by virtue of their lock-in arrangements entered into at the date of Admission, would beconsidered to be acting in concert under the rules of The Code for the period ending 12 months fromsuch Admission.

8.7 Save as disclosed in this document, no Director (or member of his family) has any interest, beneficialor non-beneficial, in the share capital of the Company.

8.8 Save as disclosed in this document, there are no outstanding loans or guarantees provided by theCompany to, or for the benefit of, any of the Directors.

9 Directors’ Service Contracts and Remuneration

9.1 Guy Levit has been a director of the Subsidiary since 11 June 2000. On 20 July 2005 Guy Levitentered into an employment agreement with Subsidiary. The employment agreement is terminable onnot less than 12 months’ written notice given by either party to the other at any time. The employmentagreement contains provisions for early termination, inter alia, in the event of a breach by theDirector. The basic annual salary payable is NIS 336,000 (approximately £42,000) per annum plusstatutory benefits to be reviewed annually (without any obligation to increase the same) together witha car and a contribution of 5 per cent. of annual salary to pension and other standard Israeliemployment benefits. The employment agreement contains restrictive covenants against competitionand solicitation, for a period of 12 months following termination of his employment. Upontermination of the contract, no benefits (other than those accruing during the notice period) are due tothe Director but the Director will receive severance payments in accordance with Israeli Law.

9.2 On 20 July 2005, Guy Levit entered into a letter of appointment with the Company under which hewas appointed as a executive director of the Company. The appointment will be terminated upon thegiving of 12 months written notice by either party or in the event that Guy Levit ceases to be anemployee under the terms of his employment agreement referred to above and contains provisions forearly termination, inter alia, in the event of a breach by the Director. The basic fee payable is £5,000per annum. The letter of appointment contains restrictive covenants against competition andsolicitation for a period of 12 months following termination of the appointment. Upon termination ofthe appointment no benefits (other than those accruing during the notice period) are due to theDirector.

60

9.3 On 20 July 2005 Horacio Furman entered into a letter of appointment with the Company. Theappointment may be terminated on not less than 3 months notice given by either party to the other atany time. The letter of appointment contains provisions for early termination, inter alia, in the eventof a breach by the Director. The basic fee payable is £5,000 per annum to be reviewed annually(without any obligation to increase the same). Upon termination of the appointment, no benefits (otherthan those accruing during the notice period) are due to the Director.

9.4 On 21 July 2005 Irvin Fishman entered into an agreement with the Company. The service agreementis terminable on not less than 6 months’ written notice given by either party to the other at any time.The service agreement contains provisions for early termination, inter alia, in the event of a breachby the Director. The service agreement contains restrictive covenants against competition andsolicitation for a period of 3 months following termination of his employment. Upon termination ofthe contract, no benefits (other than those accruing during the notice period) are due to the Director.Irvin Fishman will not receive any remuneration in respect of his service agreement. HoweverAuerbach Hope will receive a fee from the Company in the sum of £20,000 plus VAT per annum inrespect of office facilities and other functions to be provided to Irvin Fishman in connection with theperformance of his duties under his service agreement.

9.5 On 20 July 2005 David Rubner entered into a letter of appointment with the Company. Theappointment may be terminated on not less than 3 months notice given by either party to the other atany time. The letter of appointment contains provisions for early termination, inter alia, in the eventof a breach by the Director. The basic fee payable is £5,000 per annum to be reviewed annually(without any obligation to increase the same). Upon termination of the appointment, no benefits (otherthan those accruing during the notice period) are due to the Director.

9.6 On 20 July 2005 Geoffrey Simmonds entered into a letter of appointment with the Company. Theappointment may be terminated on not less than 3 months notice given by either party to the other atany time. The letter of appointment contains provisions for early termination, inter alia, in the eventof a breach by the Director. The basic fee payable is £5,000 per annum to be reviewed annually(without any obligation to increase the same). Upon termination of the appointment, no benefits (otherthan those accruing during the notice period) are due to the Director

9.7 Save as disclosed in this paragraph 9 there are no existing or proposed service or consultancyagreements between any Director and the Group.

9.8 In the period from incorporation and ended 20 July 2005 the total aggregate remuneration paid andbenefits-in-kind granted to the Directors was approximately £40,000. The amounts payable to theDirectors by the Group under the arrangements in force at the date of this document in respect of theyear ending 31 December 2005 are estimated to be approximately £35,000 (excluding anydiscretionary payments which may be made under these arrangements).

9.9 There will be no variation in the total emoluments of the Directors as a result of the Placing.

9.10 There is no arrangement under which any Director has waived or agreed to waive future emoluments.

10 Key Management

10.1 In addition to the Directors, the following comprise the key management of the Group:

Commencement of Name Employment

Mark Carlin 1 January 2001Gil Shapira 13 June 1999Benny Bornfeld 1 November 2004

10.2 None of the employment contracts relating to the key management referred to above contain a rightto benefits (other than those due during the notice period due under the contract) upon termination butthe Israeli employee’s will receive severance payments in accordance with Israeli Law.

61

10.3 As at the date of this document, the Group has 24 employees located in Israel and the USA as follows:

Number of Employees Number of EmployeesLocated in the USA Located in Israel

Sales and Marketing 2 1General and Administration 0 2Research and Development 0 14Operations 0 5

11 Material Contracts

The following contracts, not being contracts entered into in the ordinary course of business, have beenentered into by the Group within the two years immediately preceding the date of this document and are, ormay be, material:

11.1 The Placing Agreement dated 27 July 2005 pursuant to which and conditional upon, inter alia,Admission taking place on or before 8.30 a.m. on 7 August 2005 Seymour Pierce has agreed to usereasonable endeavours to procure subscribers for the Placing Shares proposed to be issued by theCompany at the Issue Price. The Placing is not underwritten.

The Placing Agreement contains indemnities (from the Company only) and warranties from theCompany, the Directors and RTI (subject to certain specific limitations) in favour of Seymour Piercetogether with provisions which enable Seymour Pierce to terminate the Placing Agreement in certaincircumstances prior to Admission including circumstances where any warranties are not found to betrue or accurate in any material respect. The liability of the Directors for breach of warranty is limited.Under the Placing Agreement the Company has agreed to pay to Seymour Pierce a corporate financefee of £60,000 together with a commission of 4 per cent. of the value of the Placing Shares at the IssuePrice. In addition, pursuant to the terms of the Placing Agreement the Company has agreed to issueto Seymour Pierce 5,000,000 Warrants upon completion of the Placing;

11.2 a nominated adviser agreement dated 27 July 2005 made between (1) the Company, (2) the Directorsand (3) Seymour Pierce pursuant to which the Company has appointed Seymour Pierce to act asnominated adviser to the Company for the purposes of the AIM Rules. The Company has agreed topay Seymour Pierce an annual fee of £20,000 plus VAT for its services as nominated adviser. Theagreement contains certain undertakings and (in respect of the Company only) indemnities given by(1) the Company and (2) the Directors in respect of, inter alia, compliance with applicable laws andregulations. The agreement is for a fixed term of 12 months from the date of Admission and subjectto termination on 3 months notice by either party thereafter;

11.3 a broker agreement dated 27 July 2005 made between (1) the Company, (2) the Directors and (3)Seymour Pierce pursuant to which the Company has appointed Seymour Pierce to act as broker to theCompany for the purposes of the AIM Rules. The Company has agreed to pay Seymour Pierce anannual fee of £15,000 plus VAT for its services as broker. The agreement contains certain undertakingsand (in respect of the Company only) indemnities given by (1) the Company and (2) the Directors inrespect of, inter alia, compliance with applicable laws and regulations. The agreement is for a fixedterm of 12 months from the date of Admission and subject to termination on 3 months notice by eitherparty thereafter;

11.4 the Share Purchase Agreement dated 20 July 2005 between the Vendors (1) the Company (2) theSubsidiary (3) RTI (4) and Westside (5) whereby the Company agreed to acquire the entire issuedshare capital of the Subsidiary in consideration for the allotment and issue to the vendors of65,380,000 new Ordinary Shares, credited as fully paid at the Issue Price per share together with thegrant of 25,000,000 Warrants. In addition, the Deferred Consideration will be payable to the Vendorsif the profits before taxation of the Subsidiary for the three year period commencing 1 January 2005and ending 31 December 2007 are greater than USD$3,500,000 such that the Vendors will be allottedand issued in aggregate 5,000,000 further new Ordinary Shares, credited as fully paid at the IssuePrice per share, for each whole amount of USD$250,000 by which the profits of the Subsidiary exceedUSD$3,500,000, up to a maximum of a further 90,000,000 new Ordinary Shares. Under the terms of

62

the agreement the Vendors have give certain warranties to the Company as to title and capacity andcertain of the Vendors have given normal commercial warranties to the Company regarding theSubsidiary and its subsidiaries. In addition the Company has given certain warranties to the Vendorsrelating to the Company. The warranties are limited as to quantum and time.

In addition under the terms of the agreement, the holders of options to subscribe for shares in theSubsidiary on the completion date, entered into exchange agreements pursuant to which they haveagreed to exchange their options in respect of such shares for options to subscribe for Ordinary Sharespursuant to the Unapproved Share Option Scheme on the same vesting terms for each option holderas they had previously held options in the Subsidiary. As a result of such exchange agreements,options have been issued to employees of the Group pursuant to the terms of the Unapproved ShareOption Scheme, save as regards the exercise price and terms of vesting which reflect the vesting andexercise price which such employees held their options in the Subsidiary.

12 Summary of Principal Features of the Unapproved Share Option Scheme

12.1 The Unapproved Share Option Scheme was adopted by the Board on 20 July 2005. As at the date ofAdmission, options over a total of 1,870,213 Ordinary Shares have been granted under the terms ofthe Unapproved Share Option Scheme to employees of the Group in exchange for the previous optionswhich were granted or were due to be granted in the Subsidiary which were then cancelled. The1,870,213 options have exercise prices which vary between the nominal value and the Issue Price.

12.2 The Unapproved Share Option Scheme includes two appendices that contain special provisions(which amend the main terms as set out below) with respect to grants to employees who areconsidered Israeli residents for purposes of Israeli tax laws or residents of the USA for purposes ofUSA tax laws. Such provisions allow the Company to grant options to such employees under certainconditions that will entitle them to certain tax benefits under these laws.

12.3 The Unapproved Share Option Scheme is not designed to be capable of approval by theCommissioners of Revenue and Customs under Chapter 8 of Part 7 of, and Schedule 4 to the IncomeTax (Earnings and Pensions) Act 2003.

12.4 Options are currently satisfied by the allotment of Ordinary Shares.

12.5 Options are not transferable, nor are they pensionable. Options may normally be exercised before thetenth anniversary of the date of grant by a person who is a director or employee on the date of exercise.Save for options which have been granted to employees of the Group immediately following theacquisition of the Subsidiary and in accordance with the Share Purchase Agreement, options willnormally vest as to one quarter each year, such vesting commencing on the first anniversary of thedate of grant, subject to the option holder being an employee or a director of a Group company at therelevant date, unless the Directors (in their absolute discretion) determine otherwise. Performanceconditions maybe required to be met at the discretion of the Directors. Options will normally lapse onthe expiry of the tenth anniversary after the date of the grant.

12.6 Options will normally lapse on cessation of employment except at the absolute discretion of theDirectors who may allow the option holder to exercise his options on a once and for all basis duringa period not exceeding six months following cessation of employment. However, in any event optionswill become exercisable for:

(a) a period of 12 months on the death of an option holder; or

(b) for a period of six months on his ceasing to be an employee of the Company by reason ofretirement, injury, disability (including illness), redundancy, or the sale or transfer out of theCompany of his employing company, business or part of the business to which his employmentrelates.

12.7 Ordinary Shares issued pursuant to the exercise of options will rank in full for all dividends or otherdistributions payable by reference to a record date occurring on or after the date of allotment. In all

63

other respects the Ordinary Shares so allotted shall be identical and rank pari passu with the fully paidregistered Ordinary Shares in issue on the date of such allotment.

12.8 The exercise price of further options granted shall be no less than the nominal value of an OrdinaryShare.

12.9 The option price may be adjusted in the event of a capitalisation issue or upon consolidation,subdivision or reduction of the Company’s share capital, subject to the written certificate of theauditors that such adjustment is fair and reasonable and provided that no increase is made to theaggregate exercise price relating to any option.

12.10 The aggregate number of Ordinary Shares for which options may be granted under the UnapprovedShare Option Scheme at any time shall be further limited so that it shall not exceed 10 per cent. of theissued ordinary share capital of the Company at the relevant time when aggregated with any furtheroptions which are granted in accordance with Chapter 9 of Part 7 and Schedule 5 to the Income Tax(Earnings and Pensions) Act 2003 or under any other employee share scheme in respect of rightsgranted during the preceding 10 years.

12.11 The Board has the power to amend the provisions of the Unapproved Share Option Scheme providedthat no amendment may materially affect the rights of an option holder in respect of an option grantedprior to the amendment being made except with the consent in writing of the optionholder.

13 Working Capital

The Directors are of the opinion having made due and careful enquiry that, taking into account the netproceeds of the Placing and the existing facilities available to the Group, the Group has sufficient workingcapital for its present requirements, that is at least 12 months from the date of Admission.

14 Taxation

14.1 Introduction

The information in this section is based on the Directors’ understanding of current tax law andInland Revenue practice. The following should be regarded as a summary and should not beconstrued as constituting advice. Prospective shareholders are strongly advised to take theirown independent tax advice but certain potential tax benefits are summarised below in respectof an individual resident in the UK for tax purposes.

On issue, the Placing Shares will not be treated as either “listed” or “quoted” securities for taxpurposes. Provided that the Company remains one which does not have any of its shares quoted on arecognised stock exchange (which for these purposes does not include AIM), the Placing Shares andthe Offer Shares should continue to be treated as unquoted securities.

The following information is based upon the laws and practice currently in force in the UK andmay not apply to persons who do not hold their Ordinary Shares as investments.

14.2 Capital Gains Tax (“CGT”)

Disposals

Changes were made to the rules relating to the holdings of shares from 6 April 1998 so that the“pooling” of shares (i.e. treating them as one asset) no longer applies. Therefore, any disposal ofshares is usually treated on a last in, first out basis for the purposes of calculating gains that arechargeable to tax.

Taper Relief

On 5 April 1998, “taper relief” was introduced which applies to individual investors and trustees (butnot to corporate investors). Taper relief reduces the chargeable gain assessable to CGT in relation tothe period the investment is held and the scales of relief depend upon whether the investment is a

64

“business” or “non-business” asset. The scale of relief is enhanced for those assets that qualify as“business” assets. Business assets include shares in qualifying unquoted trading companies. For thesepurposes, companies admitted to trading on AIM are regarded as unquoted.

During the period for which the shares are held the classification may change so that for part of theholding period, shares in the Company will be deemed to be non-business assets with the associatedreduced scales of taper relief applicable. If this is the case, the taper relief would be calculated byapportioning any gain assessed on shares in the Company between the non-business and businessperiods with each part of the gain then attracting taper relief at the appropriate rate, for the whole ofthe qualifying holding period.

CGT Gift Relief

If shares in an AIM company, which is a trading company, or the parent company of a trading group,are transferred to a third party, other than at arm’s length, the deemed capital gain can be “held over”,i.e. the CGT liability is postponed until a subsequent arm’s length disposal by the transferee, whoeffectively inherits the transferor’s base cost. The relief must be claimed by both the transferor and thetransferee within five years and ten months of the end of the relevant tax year in which the gift wasmade and the transferee must be resident or ordinarily resident in the UK and remain so for six years.If CGT gift relief is claimed, the effect of the claim is that the ownership for taper relief purposes startsagain, with no taper relief in respect of the previous period of ownership being applicable.

14.3 Inheritance Tax (“IHT”)

Shares in qualifying AIM trading companies can attract 100 per cent. business property relief fromIHT provided that the shares are held for at least two years before a chargeable transfer for IHTpurposes takes place.

14.4 Income Tax

Taxation of Dividends

No tax will be witheld from dividend payments made by the Company. UK resident individualshareholders are treated as having received income of an amount equal to the sum of the dividend andits associated tax credit, the tax credit for dividends paid being 10 per cent. of the combined amountof the dividend and the tax credit (i.e. the tax credit will be one ninth of the dividend). The tax creditwill effectively satisfy a UK resident individual shareholder’s lower and basic rate (but not higher rate)income tax liability in respect of the dividend. UK resident individual shareholders who are subject totax at the higher rate (currently 40 per cent.) will have to account for additional tax. The special rateof tax set for higher rate taxpayers who receive dividends is 32.5 per cent. After taking account of the10 per cent. tax credit, such a taxpayer would have to account for additional tax of 22.5 per cent. ofthe combined dividend and tax credit. In determining what tax rates apply to a UK resident individualshareholder, dividend income is treated as his top slice of income.

A UK resident (for tax purposes) corporate shareholder will generally not be liable to UK corporationtax on any dividend received and will be entitled for tax purposes to treat any such dividend and therelated tax credit as franked investment income.

A UK pension fund, as defined in Section 231A Income Corporation Taxes Act 1988, is restrictedfrom claiming a repayment of the tax credit.

Shareholders not resident in the UK are generally not taxed in the UK on dividends received by them(unless, exceptionally, the investment is managed by a UK investment manager acting, broadly, onarm’s length terms). By virtue of double taxation agreements between the UK and other countries,some overseas shareholders are able to claim relief for all or part of the tax credits carried by thedividends they received from UK companies. Persons who are not resident in the UK should consulttheir own tax advisers on the possible applicability of such provisions, the procedure for claimingrepayment and what relief or credit may be claimed in respect of such tax credit in the jurisdiction inwhich they are resident.

65

Loss Relief

If a loss arises on the disposal of shares in an unquoted trading company, such shares being originallyacquired on a subscription for new shares, the loss may be relieved against income of that year or theprevious year (with priority for relief in the current year where income of both years is utilised). Anyloss remaining after claiming relief against income, may be available for relief against capital gainsin either the current or subsequent years.

14.5 Stamp Duty and stamp duty reserve tax

Transfers or sales of Ordinary Shares will be subject to ad valorem stamp duty (payable by thepurchaser) and generally at the rate of 50p per £100 or part thereof rounded up to the nearest £5 andan unconditional agreement to transfer such shares, if not completed by a duly stamped stock transferform within sixty days of the day on which such agreement is made or becomes unconditional, willbe subject to SDRT (payable by the purchaser and generally at that rate). However, if within 6 yearsof the date of the agreement an instrument of transfer is executed pursuant to the agreement and stampduty is paid on that instrument, any liability to SDRT will be cancelled or repaid.

The above is a summary of certain aspects of current law and practice in the UK. A shareholderwho is in any doubt as to his tax position, or who is subject to tax in a jurisdiction other thanthe UK, should consult his or her professional adviser.

15 Litigation

15.1 Save as set out below, there are no governmental, legal or arbitration proceedings in which any Groupcompany is involved or of which any Group company is aware are pending or threatened by or againstany Group company in the twelve months preceeding the date of this document which may have orhave had a significant effect on the Group’s financial position or profitability.

15.2 A claim has been made by EMC Computer Storage Systems (Sales and Services) Ltd. and EMC(Benelux) B.V. against both the Subsidiary and COMSEC Ltd regarding a storage system which wasdelivered by COMSEC damaged and returned by the Subsidiary. The claim is for NIS 954,059(approximately £120,000) which has been totally refuted by the Subsidiary and in addition theSubsidiary has issued a counter-claim for damages resulting from delay in receipt of a workingsystem.

15.3 The Subsidiary has received correspondence claiming that one of the features of the Group’stechnology could be infringing a registered European patent of a third party. The Directors believe thatthe registered patent is not sustainable and have been advised that sufficient prior arts material existsto oppose the patent.

16 General

16.1 It is estimated that the total expenses payable by the Company in connection with the Placing,Admission and the Share Purchase Agreement will amount to approximately £325,000 (excludingVAT). The Company has agreed to pay Seymour Pierce commission of £60,000 (plus VAT) in respectof the Placing.

16.2 The total net proceeds of the Placing (after expenses and excluding VAT) is £1,175,000.

16.3 Save as disclosed in this document, there has been no significant change in the trading or financialposition of the Company since 31 December 2004.

16.4 Save as disclosed in this document, there has been no significant change in the trading or financialposition of the Subsidiary or TeleMessage Inc. since 31 December 2004.

16.5 As far as the Directors are aware there are no known trends, uncertainties, demands of events that arereasonably likely to have a material effect on the Group’s prospects for at least the current financialyear.

66

16.6 BDO Stoy Hayward LLP which is a member firm of the Institute of Chartered Accountants inEngland and Wales has given and not withdrawn its written consent to the inclusion in this documentof its report set out in Part III and the references thereto and to its name in the form and context inwhich it appears.

16.7 Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global have given and not withdrawntheir written consent to the inclusion in this document of their report set out in Part IV and their letterset out therein and the references thereto and to their name in the form and context in which theyappear.

16.8 BDO Stoy Hayward LLP accepts responsibility in relation to this document for the report set out inPart III of this document and confirm that to the best of its knowledge (having taken all reasonablecare to ensure that such is the case) the information contained in the report set out in Part III of thisdocument is in accordance with the facts and does not omit anything likely to affect the import of suchinformation.

16.9 Ori Rosen & Co. have acted as the Subsidiary’s legal advisers in respect of the acquisition referred toat paragraph 11.4 above.

16.10 Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global, accepts responsibility for thereport set out in Part IV of this document and confirm that to the best of their knowledge (having takenall reasonable care to ensure that such is the case) the information contained in the report set out inPart IV of this document is in accordance with the facts and does not omit anything likely to affectthe import of such information.

16.11 Kost, Forer, Gabbay & Kasierer have been the auditors to the Subsidiary for the period of thehistorical financial information.

16.12 Seymour Pierce has given and not withdrawn its written consent to the inclusion in this document ofits name and the references thereto in the form and context in which they appear.

16.13 Save as set out in this document, there are no patents or intellectual property rights, licences orcommercial or financial contracts of manufacturing processes which is material to the Group’sbusiness or profitability.

16.14 There have been no interruptions in the business of the Group which may have or have had in the 12months preceding publication of this document a significant effect on the financial position of theGroup.

16.15 The Issue Price represents a premium of 4.5p over the nominal value of 0.5p per Ordinary Share. Thepremium arising on the Placing amounts to £1.35 million in aggregate.

16.16 Save as disclosed in this document no payments have been made by the Group to promoters.

16.17 Save as disclosed in this document no person (excluding professional advisers otherwise disclosed inthis document and trade suppliers) has:

16.17.1 received, directly or indirectly from the Group within the 12 months preceding the date ofthis document; or

16.17.2 entered into contractual arrangements (not otherwise disclosed in this document) to receive,directly or indirectly, from the Group on or after Admission any of the following:

• fees totalling £10,000 or more;

• securities of the Company where these have a value of £10,000 or more calculated byreference to the Placing Price; or

• any other benefit with the value of £10,000 or more at the date of this document.

67

16.18 It is expected that definitive Ordinary Share and Warrant certificates will be despatched by hand orfirst class post by 10 August 2005. In respect of Ordinary shares and Warrants in uncertificated formit is expected that the CREST stock accounts will be credited on 3 August 2005. The Registrars shallkeep records relating to the issue of certificated and uncertificated shares issued by the Company.

16.19 The financial information relating to the Company and the Subsidiary contained in this admissiondocument does not comprise statutory accounts for the purposes of section 240 of the Act. Theinformation contained in Part III and IV has been audited and BDO Stoy Hayward LLP and Kost,Forer, Gabbay and Kasierer have given unqualified audit reports on the statutory accounts in respectof the Company and the Subsidiary (respectively) for those financial years. No other informationcontained in this document has been audited by such auditors.

16.20 No dividends have been paid since the Company’s inception.

16.21 There is no Director or member of a Director’s family who has a related financial product (as definedin the AIM Rules) referenced to the Ordinary Shares.

16.22 Other than the current application for Admission, the Ordinary Shares and the Warrants have not beenadmitted to dealings on any recognised investment exchange nor has any application for admissionbeen made nor are there intended to be any other arrangements for there to be dealings in the OrdinaryShares or Warrants.

16.23 All of the Ordinary Shares have a nominal value of 0.5 pence each and rank pari passu and noShareholder has different voting rights to other Shareholders.

16.24 As far as the Directors are aware there are no arrangements relating to the Group, the operation ofwhich may at a subsequent date result in a change of control of the Company.

16.25 Save as disclosed in paragraph 7 of this Part VII, as far as the Directors are aware, the Company is notdirectly or indirectly controlled by any one person.

16.26 Save as set out in this document as far as the Directors are aware there are no environmental issuesthat may affect the Group’s utilisation of its tangible fixed assets.

16.27 Save as disclosed in this document as regards for each financial year covered by the historicalfinancial information the Company has had no principal investments and there are no principalinvestments in progress and there are no principal future investments on which the board has made afirm commitment.

16.28 The Company is not aware of the existence of any takeover bid pursuant to the rules of the Code, orany circumstances which may give rise to any takeover bid, and the Company is not aware of anypublic takeover bid by third parties for the Ordinary Shares.

17 Availability of Admission Document

Copies of this document will be available free of charge during normal business hours on any week day(Saturdays, Sundays and public holidays excepted) until the date following one month after the date ofAdmission at the registered office of the Company and at the offices of Seymour Pierce Limited,Bucklersbury House, 3 Queen Victoria Street, London EC4N 8EL.

Dated 27 July 2005

68

sterling 71306