Despite recently reporting an operating loss, Comeleon is to launch a share issue to fund the purchase of its parent company.

Tanfield created Comeleon and floated it on the Alternative Investment Market three years ago.

The firm was planning to develop commercial opportunities for its advanced digital technology, which is capable of printing high-quality images on to objects such as computer equipment and mobile phones.

In its original business plan, Comeleon expected to use its technology for high volume imaging at its Tanfield Lea plant.

But changing trends in the electronic consumer goods industry and moves by the major companies to outsource supply to low cost countries, meant that most manufacturers began to require imaging to be done at the point of production.

Largely as a result of these changes, Comeleon reported an interim operating loss of £4.09m on sales of £2.02m in the six months to March.

Subject to shareholder approval at a meeting on December 29, Comeleon will buy the Tanfield Group and change its name to Tanfield.

The move, brought about by Comeleon issuing new shares to buy Tanfield, will raise £1.65m to support growth opportunities for the new business.

Roy Stanley, owner of both companies, told The Northern Echo that Comeleon's reverse takeover of the larger Tanfield Group would benefit both arms of the business.

"Tanfield is growing rapidly," he said.

"We are projecting 30 per cent growth next year.

"This deal preserves Comeleon's technology for the region."

Comeleon will focus on securing technology licensing deals with new partners and generating sales of its Imagebox desktop system to retailers and small businesses.

Licensing agreements have already been signed in the US and Japan.

Comeleon also has distribution agreements in the US and Europe for more than 1,000 Imageboxes.

The Tanfield Group was founded in 1996 by Roy Stanley as a manufacturing company with a turnover of about £50,000 per year and nine employees.

By March 2003, Tanfield Group had grown organically and by acquisition into a manufacturing group with a turnover of almost £10m and 178 employees.

Tanfield Group has a core customer base of blue-chip clients across a diverse range of industries.

Mr Stanley, chief executive of Comeleon plc and chairman of Tanfield Group, will become chief executive of the new group.

Darren Kell, chief executive of Tanfield Group, will become business development director of the new group.

The new enlarged group will employ just under 200 at Tanfield Lea, near Stanley, County Durham.