Q2 2007: • Revenue was $8.9m in Q2, an increase of 11.6% compared to the same period last year. • Revenue was $16.1m YTD, an increase of 4.8% compared to the same period last year. • EBITDA was $303k in Q2 compared with $196k in the same period last year. • Operating Expenses were $5.5m compared to $4.9m in the same period the prior year. • Net loss before taxes was negative $176k in Q2 2007 compared to a Net loss of negative $532k in Q2 2006. Summary Q2 2007 SleepTech continued to see strong demand for its services in the North East of the United States. A number of the Company's partner hospital contracts have been renegotiated and SleepTech remains one of the largest providers of sleep services in the Tri-State area. The new marketing position that was announced in Q1 has been successful and the Company has already started to work with sleep professionals to provide service contracts to sleep labs outside the Tri-State area, which is expected to start showing results during Q3. Embla is now working on cementing our relationships with our customers and distribution partners throughout the world, implementing the product road map and continuing to economize and becoming more efficient. In the United States, new regulations on portable studies are anticipated in September 2007 that the Company believes will provide new opportunities. The Company believes that this, in conjunction with the American Academy of Sleep Medicine selecting the Embletta as the Study Standard for a recent contract award for examining the effectiveness of home diagnostic testing, will create a new market for the Embletta in the US. To take advantage of this opportunity the Company is looking for a US distributor for the unit and an agreement with a third party distributor should be confirmed in the near future. The Embletta is currently the “gold standard” for this type of ambulatory testing in Europe and is ideally suited for the anticipated reimbursement ruling in the United States. Embla continues to look for new opportunities in all its markets throughout the world. Operations in Q2 2007 Revenue for the Flaga Group in Q2 2007 aggregated $8.9m, an increase of 11.6% compared to Q2 2006. The gross profit margin was 61% compared to 59% in the previous year EBITDA for Q2 2007 was positive $303k or 3% compared to EBITDA before restructuring cost of $196k or 2% for Q2 2006. Net profit before taxes was negative $176k for the quarter in comparison to net loss before taxes of $532k for the same period last year. Balance Sheet Total assets at the end of Q2 2007 were $60.8m, a decrease of $1.3m from the end of the year 2006. Deferred tax assets are capitalized and amounted to $4.2m. Shareholders' equity was $39.2m at June 30, in comparison to $40.2m at the beginning of the year. Equity ratio was 64% in comparison to 65% at year-end 2006. Cash Flow Working capital provided by operating activities was negative of $464k for the first six months of 2007 compared to negative working capital of $579k in the previous year. Future Prospects The market for sleep diagnostic products remains highly competitive and fluctuating. The Company expects to improve its competitive position in the US market, with expected regulatory changes regarding reimbursement for home studies. The Company also expects to continue building relationships with distributors around the world for Embla to increase the Company's sales and reputation as the “gold standard” of sleep diagnostic systems. The Company expects to further build a presence for SleepTech outside of the United States Tri-State area with a successful integration of its disciplined standards, as well as moving out of the “hospital only” relationships to build business relationships with physicians directly for their own practices. The near future will continue to fluctuate, although it is the firm belief of the Management team of Flaga Group that the future prospect for the Company remains solid. It is further expected that this year's targets will be achieved and that the long term prosperity for the Company remains positive. For further information, please contact: David Baker, CEO, tel: +1 480 236 4705