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BRAINSPARK Plc (“Brainspark” or “the Company”) UNAUDITED INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2007 CHAIRMAN’S STATEMENT In the six months ended 30 June 2007, the Company incurred a profit before taxation of £4k, compared to a loss of the comparative period last year of £72k. Brainspark has finally entered the expansion cycle and launched its first new project with the incorporation of China IPO Group Limited, an investment company focusing on opportunities in China. Meanwhile Brainspark management continue to realise value from existing assets. Financial SummaryThe consolidated net asset value at 30 June 2007 was £3,515k up from £3,511k at 31 December 2006..At 30 June 2007, Brainspark’s mid-market share price of 0.65p valued the at £2,149k against a consolidated net asset value of £3,515k. First Half 2007 Events. On 12 March Brainspark incorporated China IPO Group Limited., a Jersey company, managed in Jersey that will make investments in China, both on 6-12 months returns, in pre-IPO situations, and in 3-5 year return with high growth small- to medium- sized technology companies. China IPO Group Limited, has entered into first refusal relationships with some of the most significant Chinese Science Parks and Incubators in China. The Directors of China IPO Group Limited are the Rt. Hon. Earl of Cromer, Non-Executive Chairman, Professor F. Gardin, Executive CEO Director, Mr. E. Burman, Executive Director, and as Non-Executive Directors: Mr. Dennis Bryan Bailey, Professor Liu Man Hong and Mr. Patrick Go. Bedell Trust in Jersey act as company secretary. Allen & Overy in Beijing has been retained as the law firm. Successful private placement of China IPO shares could ultimately secure Brainspark approximately a 25% share in a company. On 2 April 2007 China IPO Group made its first pre-IPO investment in ET-China Holdings Ltd ("ET-China"), a travel company with its main operations in Guangzhou (Guangdong Province). China IPO Group has invested $200k (£100k) as part of a $7,000k (£3,500k) unsecured convertible loan note for pre-IPO funding. On 26 June the Company has agreed with Professor. F. Gardin to extend the terms of the interest-free convertible loan of £213,000 for a period of two years such that it is now repayable on 31 December 2009, with the right on either party to demand conversion into Ordinary Shares at the price of 0.46 p per share at any time. The Loan Stock will remain interest free. Portfolio Review At of 30 June 2007 Brainspark had holdings in 8 companies, 3 in the UK, 1 in Jersey, 2 in Italy, 1 in Israel and 1 in the United States. Its stakes range from nearly 2% to 100% in these companies. The portfolio covers a wide range of business sectors, including web services, application service providers, advanced IT solutions and an investment company. On 22 February, Cotterford, a UK investment company subscribed £400k for an issue of new Metapack (www.metapack.co.uk) shares representing 17.78 % of the enlarged issued share capital. Following the dilution Brainspark holds 8.23% of the enlarged capital (10.58% pre-investment). On 2 May Geosim (www.geosim.co.il), the 3D city technology and modelling producer, in which Brainspark (www.brainspark.com) holds 44.11%, raised additional finance for working capital and development. Private investors in the United States have subscribed US$980k (£490k)to complete the second round of financing at a pre-money valuation of $20,000k (£10,000k)The first round of financing was undertaken at pre-money valuation of US$10,000k (£5,000k)was closed in September 2006. After these additional subscriptions Brainspark has a 39.53% interest in Geosim
Further progress for the second half of 2007
During the second half of 2007 Brainspark continued the positive trend of the first six months, here are some of the main events.
In July 2007 China IPO Group Limited entered in two further exclusive contracts with Tianjin TEDA International Business Incubator (which has more than 180 companies currently being incubated) and the Tianjin TIDI Technology Incubation Centre (which has more than 100 companies being incubated). TEDA is part of the Tianjin Economic Development Zone. Tianjin is one of China's largest ports, and a key centre for Electronics, Bio-chemicals, Automobiles, Manufacturing and Logistics.
On 3 August 2007 Et-China.com International Holdings (“ET-China”) went public on AIM and China IPO Group Limited converted the option awarded to holders of unsecured convertible loan notes in ET-China China IPO Group has converted its $200k (£9100k) loan notes into 153,639 ET-China shares, which at listing rice of 127p a share were worth £200k. On listing China IPO realized approximately £15k from sale of part of the shares at 127p a share.
As from 17 August Brainspark website (www.brainspark.com) contains all the information required to be disclosed pursuant to AIM Rule 26.
On 24 September Brainspark announced that Geosim (www.geosim.co.il), had entered into a new agreement with CRASH Ventures LLC, under which Crash LLC will act as an exclusive consultant. Under this new agreement the exclusivity period has been extended from 31 May 2008 to 31 May 2010. Crash LLC will assist Geosim in raising a total of US$3,000k (£1,500k) of which private investors in the United States have already subscribed US$200k (£100k), at a pre-money valuation of US$22,000k (£11,000k). This alone is equivalent to 1.30p per share. The carrying value of Geosim in our books is £1.83million, or 0.55p per share. The new Philadelphia 3D online website is due for launch before year-end. On 26 September Mediapolis SpA, the amusement park in North of Italy were Brainsaprk has a small investment, was given the final green light to start the implementation phase of the project, which is expected to begin in Spring 2008. Brainspark management remains committed to continue the positive trend of the Company during the final part of the year. Prof. Francesco Gardin Chairman 27 September 2007
FINANCIAL STATEMENTS CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 30 JUNE 2007
CONSOLIDATED BALANCE SHEET FOR THE PERIOD ENDED 30 JUNE 2007
STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2007
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