Placing & Open Offer-Replace

Internet Music & Media PLC
13 July 2001

This announcement replaces the Internet Music & Media PLC - Proposed Capital
Reorganisation and Proposed Placing and Open Offer of 17,366,479 New Ordinary
Shares at 12p per share announcement released on the RNS system under RNS
number 8556G at 07:00 on 13 July, 2001.

Due to a typographical error under the heading Capital Reorganisation, the
last sentence of the paragraph immediately under point (ii) has been amended
to read:  'No application will be made for the Deferred Shares to be admitted
to trading on AIM.'

All other details remain the same.

The full amended text follows.
     
                                                               13th July, 2001


                  INTERNET MUSIC & MEDIA PLC ('the Company')

                         Proposed Capital Reorganisation
                                     and
                        Proposed Placing and Open Offer of
                17,366,479 New Ordinary Shares at 12p per share


Introduction

On 27th March, 2001, the Company announced that it had raised £240,000 by a
non pre-emptive equity issue, together with £765,000 of loans. In addition, on
25th April, 2001 the Company announced that £350,000 of further loans had been
provided. Furthermore, on 20th June, 2001, the Company announced that £250,000
of further loans had been provided.

On 2nd July, 2001 the Company's Ordinary Shares were suspended pending the
publication of the annual report and accounts for the period ended 31st
December, 2000, which the Directors decided should be completed at the same
time as the publication of a document setting out the details of the Proposed
Placing and Open Offer.

The Board now announces that the Company intends to raise approximately £1.85
million after expenses by means of a Placing and Open Offer to repay the above
loans and for working capital generally. An extraordinary general meeting to
consider the proposals has been convened for 7th August, 2001, immediately
following the annual general meeting of the Company.

Recent History

In many ways, the Directors of the Company are satisfied with progress made to
date. The objectives set out in the prospectus issued by the Company in March
2000 have, to a large extent, been achieved. These objectives were the
establishment of a London office to house an internet radio station, which
became operational in December 2000, the launch of Groovetech LLC's ('
Groovetech') own record label, which is proceeding according to plan, and the
upgrading and updating of Groovetech's website to allow greater interactivity
and e-commerce in currencies and territories outside the USA. The London
facility also includes a recording studio and a warehouse, which serves as the
European distribution centre for vinyl records, CDs and other merchandise.

This progress has been achieved at a cost which is in excess of the Company's
original budget and in a slower timeframe than originally envisaged. The
principal reason for this relates to the development of the Company's new
website. This entailed a significant amount of costly programming which
exceeded budget and did not produce a satisfactory result. The Directors of
the Company came to the conclusion that it was necessary to spend significant
further sums to deliver a functional solution and to ensure the future
robustness of the website.  This has now been achieved and the Company's new
website (www.groovetech.com) is now fully operational and generating
increasing sales. As a result of the cost overrun and delay, however, the
Company has found it necessary to raise additional funds.

In addition to the loans totaling £1,365,000 set out above, the Company has
raised a further £66,000 by way of loan and under the Placing and Open Offer
the providers of the loans have either irrevocably committed to subscribe for
Offer Shares and/or have entered into placing commitments under the Placing
thereby effectively capitalising them. The Placing Shares will be subject to
recall by Qualifying Shareholders under the Open Offer.

In addition to the above loans, the Company has a term loan, repayable in
April 2003, of £700,000 from Coutts & Co. Limited which has been guaranteed by
Mr Nicholas Cowan.

As a part of the acquisition of Groovetech in May 2000, the Company entered
into a put and call option agreement under which the Company has the option to
acquire and Groove Technologies Inc. ('Groove Technologies') has the option to
sell the outstanding 90,000 membership units in Groovetech, to be satisfied by
the issue of 4,322,749 Ordinary Shares on the exercise of the option. This had
the effect of providing deferred consideration to Mr Jonathon Cunningham, Mr
Zachary Jenkins and Mr Brian Pember in a tax efficient manner.

The requirement for additional short term capital has been met by loans from
Mr Nicholas Cowan and from companies associated with or introduced to the
Company by Highland Holdings Limited ('Highland Holdings'), a company owned by
Mr Matthew Tawse. Groove Technologies has agreed to reduce its entitlement
under an option agreement in order to reward Highland Holdings for identifying
the source of funds and assisting in the completion of the Placing without
diluting the other shareholders in the Company. Accordingly, as consideration
for its services in this context, Highland Holdings will receive a fee of £
331,988, to be satisfied by the issue of 2,766,559 New Ordinary Shares subject
to Shareholders waiving pre-emption rights in connection with such an issue
and Highland Holdings obtaining a waiver of the obligations on Highland
Holdings and any person acting in concert with it, under Rule 9 of the City
Code. The terms of the option agreement referred to above are proposed to be
amended pursuant to the terms of a deed of variation dated 13th July, 2001, so
as to reduce the number of New Ordinary Shares to be allotted on exercise of
an option by the same amount, to ensure that the issue to Highland Holdings is
not dilutive so far as Shareholders are concerned. Accordingly the number of
New Ordinary Shares which it is now proposed will be issued on the exercise of
an option has been reduced by 2,766,559 Ordinary Shares, to 1,556,190 New
Ordinary Shares.

Details of the Placing and Open Offer

The Company is proposing to raise approximately £1.85 million (after expenses
to be settled from the proceeds of the Placing) by the issue of the New
Ordinary Shares pursuant to the Placing and Open Offer.  Accordingly,
10,053,889 Offer Shares have been conditionally placed by Insinger Townsley
subject to Qualifying Shareholders having the right to apply for such shares
under the Open Offer at a price of 12p per share, free of expenses, pro rata
to their existing shareholdings on the basis of:

            13 Offer Shares for every 10 Existing Ordinary Shares

held at the close of business on the Record Date on 3rd July, 2001 and so on
in proportion for any lesser or greater number of Existing Ordinary Shares
then held.

Fractional entitlements will not be allotted but will be aggregated and sold
in the Placing for the benefit of the Company.

Your Directors, who in aggregate beneficially own 5,125,228 Existing Ordinary
Shares, representing 38.37 per cent. of the Existing Ordinary Shares, have
maximum aggregate entitlements under the Open Offer of 6,662,796 Offer Shares
of which they have irrevocably undertaken to subscribe for 4,783,823 Offer
Shares under the Open Offer.


                    Estimated total loan Amount irrevocably              Amount
                          outstanding at committed under Open   committed under
                               Admission Offer                         Placing*

                                     £                      £               £

Nicholas Cowan                   895,000                537,059         609,219
Highland Equity                   55,000                 55,000               -
Holdings Limited
Highland Capital                  55,000                 55,000               -
Holdings Limited
Highland                          55,000                 55,000               -
Specialist Fund
Limited
Brookspey Limited                 55,000                 35,357          19,643
Corvus Capital                   250,000                      -         250,000
Inv.
Barney Cordell                    25,000                 37,000               -
Peter Burrell                     25,000                      -          37,000
Robert Sangster                   16,000                      -          16,000
                                   -----                  -----           -----
                               1,431,000                774,416         931,862
                                     ===                    ===             ===



*Subject to recall by Qualifying Shareholders under the Open Offer

Use of proceeds of the Placing and Open Offer

The net proceeds of the Placing and Open Offer will amount to approximately
£1.85 million which will be utilised to repay loans of £1,431,000 and to
provide continued working capital.

Capital Reorganisation

The share capital of the Company currently comprises one class of shares,
Existing Ordinary Shares of 25p each, of which 13,358,830 are currently in
issue and paid up and 10,641,170 are unissued. It is proposed that, under the
Capital Reorganisation:


(i)       each of the 13,358,830 issued Existing Ordinary Shares will be
subdivided and redesignated into one New Ordinary Share and one Deferred
Share; and

(ii)      each of the 10,641,170 unissued Existing Ordinary Shares will be
subdivided into 25 New Ordinary Shares.


The Capital Reorganisation will result in Shareholders holding one New
Ordinary Share and one Deferred Share for each Existing Ordinary Share
currently held. The New Ordinary Shares will have substantially the same
rights (including voting and dividend rights and rights on a return of
capital) as the Existing Ordinary Shares save that their nominal value will be
reduced to Ip. No application will be made for the Deferred Shares to be
admitted to trading on AIM.

Definitive share certificates in respect of the New Ordinary Shares arising
from the Placing and Open Offer are expected to be despatched on 20th August,
2001. Share Certificates in respect of the Capital Reorganisation are expected
to be despatched on 20th August, 2001. Definitive share certificates are not
expected to be despatched to those Shareholders or placees who have elected to
receive New Ordinary Shares in uncertificated form if and only if, that person
is a 'system member' (as defined in the Uncertificated Securities Regulations
1995) in relation to CREST. No share certificates will be issued in respect of
the Deferred Shares. Share certificates in respect of Existing Ordinary Shares
will cease to be valid for any purpose immediately upon the passing of the
Resolutions other than as evidencing the Shareholders' title to Deferred
Shares. Prior to the despatch of definitive share certificates, transfers of
New Ordinary Shares arising from the Capital Reorganisation will be certified
against the register.

Current Trading and Future Prospects

The Company today announced its results for the period ended 31st December,
2000 which showed a loss of £1,858,146 and a loss before taxation, but after
goodwill amortisation and depreciation, of £4,141,023.

Details of the Open Offer

A prospectus and an application form, containing details of qualifying
shareholders' entitlements to the offer shares will be sent to qualifying
shareholders today.  The terms of the Open Offer provide that qualifying
shareholders who make valid applications for up to and including their maximum
pro rata entitlement will be entitled to receive all such Offer Shares.  An
application to subscribe for Offer Shares may only be made on the application
form.

Each application form will be personal to the qualifying shareholder(s) named
thereon and may not be assigned or transferred other than to satisfy bona fide
market claims pursuant to the Rules of the London Stock Exchange.

Qualifying shareholders should be aware that the Open Offer is not a rights
issue and that Insinger Townsley will not attempt to procure subscribers in
the market for Offer Shares not applied for on behalf of those qualifying
shareholders who do not apply for their entitlements.  To be treated as valid,
completed application forms and payment in full must be received by Capita IRG
Plc by 3.00p.m. on 6th August, 2001.

The Open Offer is conditional upon (i) the passing of Resolutions 1, 2 and 3
to be proposed at the Extraordinary General Meeting; (ii) the Placing
Agreement becoming unconditional in all respects and not being terminated in
accordance with its terms; and (iii) Admission becoming effective not later
than 13th August, 2001 or such later time or date not later than 31st August,
2001 as the Company, John East & Partners Limited and Insinger Townsley may
agree.


Expected Timetable of Principal Events


                                                                           2001

Record Date for Open Offer                                             3rd July

Latest time for splitting Application Forms in respect of the Open   2nd August
Offer (to satisfy bona fide market claims only)

Latest time for receipt of forms of Proxy for the Extraordinary      5th August
General Meeting

Latest time for receipt of Application Forms and payment in full   3.00 p.m. on
                                                                     6th August

Annual General Meeting                                               10.00 a.m.
                                                                         on 7th
                                                                         August

Extraordinary General Meeting (or such other later time as the       10.05 a.m.
Annual General Meeting to be held at 10.00 a.m. on the same day          on 7th
shall have concluded or been adjourned)                                  August

Record Date for Capital Reorganisation                              10th August

Admission effective and trading expected to commence                13th August

CREST accounts in respect of Placing Shares credited on             13th August

CREST accounts in respect of Offer Shares credited on               16th August

Share certificates in respect of Placing Shares and Offer Shares    20th August

Share certificates in respect of Capital Reorganisation             
despatched by                                                       20th August


Further Enquiries

Internet Music & Media PLC       Tel: [phone]
Nicholas Cowan

John East & Partners Limited     Tel: [phone]
John East
David Worlidge

Holborn Public Relations         Tel: [phone]
David Bick