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26 September 2008

Spearhead Limited, Inc ('Spearhead' or the 'Company')

Interim Results

We take pleasure in announcing the interim results for the period ended 30 June 2008 for Spearhead.  

During this period, Spearhead recorded an operating loss of US$57,154 compared to a loss of US$925,368 for the first six months of 2007, on turnover of US$6,246,947 for the first six months of 2008, compared to a turnover of US$6,811,737 for the equivalent period during 2007. 

During the first six months of 2008, the Company's core IT consulting business maintained its focus on increasing the margins, which increased from 13.41% to 17.76%, resulting in an increase in gross profit from US$913,367 for the first six months of 2007 to US$1,109,691 for the equivalent period during 2008. 

During the first six months of 2008, the Company's net income from its IT consulting business, after associated general and administrative expenses, increased to US$287,852, compared to US$254,714 for the same period during 2007. 

The Company's reduced merchant banking expenses and interest costs to US$345,006 for the first six months of 2008, compared to US$1,180,082 for the corresponding period in 2007. This resulted in an operating loss for the Company of US$57,154, compared to an operating loss of US$925,368 for the same period last year.

The improvement in the results is reflected on the statement of consolidated cashflows; during the first six months of 2008, the Company generated US$722,441 of operational cashflow, compared to a negative operating cashflow of US$702,008 for the same period during 2007. As a result, the Company was able to reduce its line of credit by US$787,005 in 2008 to US$1,354,046 (2007: US$2,141,051) while maintaining full operations with no incremental funding requirement by way of shareholder loans. 

The change in classification of some of the investor loans from long term as at 31 December 2007 to short term as at 30 June 2008 was dictated by the 31 January 2009 maturity date of those loans.

In addition to the IT consulting business of its Ottawa based subsidiary, the Company continued evaluating acquisition opportunities during the six month period ended 30 June 2008, while recognizing the need to improve its financial position.

Michel Marengere

Chairman

Contacts

Michel Marengere            +1 561 912 9977

CEO & Chairman of the Board

Nominated Adviser

Nabarro Wells & Co. Limited        +44 (0)20 7634 4705

David Nabarro

Spearhead Limited, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(Unaudited)
			30 June		31 December
			2008		2007
			$		$
Current assets:
	Cash		38,584		192,293
	Accounts receivable - trade		1,982,322		2,650,950
	Accounts receivable - other
	Prepaid expenses		82,845		20,752
	Future income taxes		204,998		211,181
Total current assets			2,308,749		3,075,176
	Property and equipment net		92,638		114,656
	Goodwill		2,743,091		2,743,091
	Future income taxes		212,221		218,622
	Total assets		5,356,699		6,151,545
Current liabilities
	Demand loan		1,354,046		2,141,051
	Accounts payable and accrued expenses		3,791,828		3,653,147
	Loans payable stockholders'		879,370		879,370
	Loans payable stockholders' and related parties		5,150,923
	Loans payable		632,225
Total current liabilities			11,808,392		6,673,568
	Loans payable stockholders'				5,150,923
	Loans payable				632,225
Long Term Liabilities			0		5,783,148
	Total liabilities		11,808,392		12,456,716
Stockholders' equity
	Capital stock, .001 par value; 200,000,000 shares
	authorized; 40,651,512 issued and outstanding		40,651		40,651
	Preferred stock, $.001 par value -0- shares issued and outstanding		0		0
	Paid in capital		5,716,349		5,716,349
	Retained earnings (deficit)		(12,319,337)		(12,353,524)
	Accumulated comprehensive income		110,644		291,353
	Total stockholders equity		(6,491,693)		(6,305,171)
	Total liabilities and stockholders' equity		5,356,699		6,151,545

Spearhead Limited, Inc. and Subsidiary
Condensed Consolidated Statement of Operations
For the six months ended 30 June
	(Unaudited)
			2008		2007
			$		$
	Consulting revenue		6,246,947		6,811,737
	Direct expenses		5,137,256		5,898,370
	Gross margin		1,109,691		913,367
	Selling, general & administrative expenses		821,839		658,653
	Net income (loss) from continuing operations		287,852		254,714
	Merchant banking expenses
	General & administrative		130,719		746,921
	Interest expense		214,287		433,161
	Total merchant banking expenses		345,006		1,180,082
	Operating loss		(57,154)		(925,368)
	Net (loss) per share		($0.001)		($0.02)

Spearhead Limited, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
30 June
(Unaudited)
	2008		2007
	$		$
Cash flow from operating activities	(57,154)		(925,368)
Adjustments to reconcile net loss to net cash used
for operating activities:
Depreciation and amortization	21,795		28,284
Change in assets and liabilities, net of effects of
acquisitions and dispositions
(Increase) decrease in accounts receivable	668,628		11,795
(Increase) decrease in prepaid expenses	(62,093)		1,010
Increase (decrease) in accounts payable and accrued expenses	138,681		223,827
Increase (decrease) in income taxes future	12,584		(41,556)
Total adjustments	779,595		223,360
Net cash provided for (used by) operations	722,441		(702,008)
Cash flows from investing activities
(Purchase) disposal of equipment	223		14,262
Cash flows from investing activities	223		14,262
Cash flows from financing activities
Borrowings (repayment) on line of credit	(787,005)		363,243
Borrowing from stockholders			325,000
Cash flows from financing activities	(787,005)		688,243
Effect of exchange rate changes on cash	(89,368)
Net increase (decrease in cash)	(153,709)		497
Cash at beginning of period	192,293		1,514
Cash at end of period	38,584		2,011
Cash paid for interest	0		0

Basis of presentation

These consolidated financial statements of Spearhead Limited, Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America ('US GAAP') for interim financial statements and do not include all the disclosures required in annual financial statements. These consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2007.

In the Directors' opinion, all adjustments necessary for fair presentation are reflected in the financial statements. All adjustments made are normal and recurring in nature. Spearhead Limited, Inc. together with its wholly owned subsidiary, has followed the same accounting policies and methods of application as in the most recent audited financial statements. 

ENDIR SEEFDISASEIU