Placing to raise £1.70m and Restructuring of Loan Notes

The Company is pleased to announce a fundraising of £1.70 million by way of a placing of 4,252,500 new Ordinary Shares at a price of 40 pence per share, and a restructuring of all of the Company’s outstanding convertible Loan Notes, amounting to £3.54 million which were due to mature on 31 October 2011.

Highlights

• £1.70 million raised by way of a Placing of 4,252,500 new ordinary shares at 40 pence per share

• Net proceeds of the Placing will accelerate the roll-out of the Company’s software in new markets, particularly eBooks

• Conversion of half of its outstanding convertible loan notes at the Placing Price and the extension of the other half to October 2013

• Placing, Conversion and Extension are subject to approval of Shareholders and Loan Noteholders at respective general meetings on 6 September 2011

• Admission expected to be effective from 7 September 2011

Terms and expressions defined in the Circular have the same meaning in this announcement.

The net proceeds of the Placing will be deployed toward accelerating the adoption of the Company’s software in new markets, particularly eBooks. The Directors believe that the Company’s software is well suited to the production of media rich eBooks including picture books, comics, graphic novels, cookery books, travel guides and encyclopaedias.

The Company will further strengthen its balance sheet, subject to the approval of the Loan Noteholders, by the conversion of £1.77 million of the Loan Notes (representing half of the outstanding Loan Notes) into 4,426,250 new Ordinary Shares and the extension of the term in respect of the remaining £1.77 million of the Loan Notes to 31 October 2013.

The Placing, Conversion and Extension are subject, inter alia, to the passing of the Resolutions at a General Meeting and the approval of the Loan Noteholders. A circular to Shareholders and Loan Noteholders setting out full details of the Resolutions and convening the General Meeting and Loan Noteholders GM will today be posted to Shareholders (the “Circular”). The Circular is available on the Company’s website at www.zoodigital.com.

Stuart Green, Chief Executive Officer of ZOO, commented “We are pleased to have secured this additional funding which will enable us to take advantage of the growth taking place in the electronic books market. Our solutions maintain the formatting qualities and standards of a physical production, thereby enhancing the enjoyment of reading it electronically and we are confident that the proceeds of this Placing will help us to achieve great success in this field.

“We are also very pleased to have reached agreement with the holders of our existing Loan Notes to restructure these commitments in order to strengthen our balance sheet. We believe this solution will benefit all of our stakeholders in the long term. The Board would like to thank all shareholders and loan noteholders for their continued support and looks forward to the future with confidence.”