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5ELSA,LausanneHalf-yearreport2017

(unaudited)

29September2017

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HIGHLIGHTSOFTHEFIRSTHALF2017

1. ORGANIZATION,BUSINESSACTIVITYANDBUSINESSCOMBINATION

5ELSA,isalimitedCompanyincorporatedon17December1998underthelawsofSwitzerlandandhasitsregis-teredtradeofficeatRueduGrand-Chêne8,1003Lausanne,Switzerland.

On28December2015theCompanysoldallof itssubsidiaries.Sincethen,theCompanyhadnomoreoperatingactivity.TheBoardofDirectorshadbeenresearchingdifferentstrategiesforfuturedevelopmentoftheCompanyincluding the most promising industry focus taking into consideration additional capital requirements and ex-pectedpossibilitiestomaximizetheshareholders’value.SeveralprivatelyheldbusinesseshadbeenreviewedaspotentialacquisitiontargetsandvariousinvestorGroupshadbeeninvitedtodiscusstheirpotentialparticipationintheplannedcapitalincrease.

Asaconsequenceof this strategysetupby theBoardofDirectors, two important transactions (“Transactions”)havebeenapprovedandtoalargeextentcompletedduringthefirsthalfof2017(withseveral importantcondi-tionssubsequentremainingforcompletionintheQ32017thathavebeencompletedasofthedateofpublicationofthisReport):

- On20May2017theCompanyhasacquired100%ofTheNativeAG,theSwissregisteredholdingcompanyforseveraldigitalcontentmarketinginvestmentsincludingcontrolinvestmentintheNewYorkbasedTheNativeMediaInc.(“AcquisitionTransaction”).

- On14June2017theshareholdershaveapprovedthecapitalincreaseofatleastCHF10milliontofinancethenewbusinessmodeloftheCompany(“CapitalIncreaseTransaction”).

UponcompletionoftheseTransactions,5ELSAisemergingasthewell-fundedinvestmentfirmwithnocontrollingshareholder,backedbythestellarrosterofthestrategicandfinancialinvestorsinglobalmedia,e-commerce,digi-talmarketingandtechnologyspace,andwithafocusonfurtherconsolidationofcomplimentarye-commerce,con-tent marketing, digital services, on line advertising and other technology properties aimed to facilitate cost-efficientandhighlycustomizedsupporttoourcorporate(brand)clientstodomorebusinessonlineandtoservicethemillennialdemographicbetter.

AstheTransactionstookplaceattheendoftheSemesterwithseveralimportantconditionssubsequentremainingoutstandingandcompletedintheirentiretyonlyinthethirdcalendarquarterof2017,thefullbusinessandfinan-cialintegrationofthenewlyacquiredsubsidiarieshasnotbeencompletedasofJune30,2017.Hence,5ELwasnotabletoobtainthecompletesetoffinancialinformationtoperformtheconsolidationoftheNativeAGandsomeofitsaffiliatecompanies.ItwasthereforedecidedbytheBoardtoconsolidatethenewsubsidiariesstartingasofOc-tober 1, 2017 since all of the conditions subsequent pertinent to the above-mentioned Transactions had beencompletedasofSeptember29,2017.

TherearenoconsolidatedfinancialstatementsoftheCompanyforneither2016,norforthefirsthalfof2017.

2. TRANSITIONFROMIFRSTOSWISSGAAPFER

AsaconsequenceofthetransitionfromIFRStoSwissGAAPFER,resultsintheincomestatementforthehalf-year2016wererestated.Changeswereprimarilyduetoadifferentaccountingtreatmentfordebtdiscounting.Inthebalancesheet,thebiggestadjustmentconcernsthenon-recognitionofacontingentconsiderationonacquisition

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ofshares.Thisleads,togetherwithothereffects,toanincreaseinequityofTCHF38onthebalancesheetasat30June2016,butnochangeinthetotalassets.

3. NETRESULT

ThenetresultisalossofTCHF331,comparedtoalossofTCHF340forthesixmonthsendedJune30,2016.TheCompanyhadnorevenueduringtheperiodsunderreviewexceptfortherevenuesonthelevelofTheNativeAGthattheCompanymadeadecisiontoconsolidateonlyasofOctober1,2017.

OUTLOOKSECONDHALF-YEAR2017Sincethe5ELSAshareholdersmeetinginJune2017hadapprovedthestrategytocompletelytransform5ELSAin-tothedynamic,fullservicee-commerce,digitalmarketingandtechnologycompany,wehavemadealotofpro-gressandareabouthalfwaythroughthetransformationprocess.

Amongimportantmilestonesalreadyaccomplishedinthethirdquarterof2017hadbeen(i)receivingallnecessaryregulatory approvals for the Capital Increase Transaction (including approval of the Swiss Takeover Board), (ii)completion of the Acquisition Transaction by acquiring 33.3% ownership interest in Holotrack AG and electingCompany’srepresentativestotheboardofdirectorsofeachofHolotrackAGandPulseEvolutionCorp,(iii)reor-ganizationof variousacquired technology competencesandcreationof the5ELBlockchain Labbusinessunit toprovide our large corporate and government clients with advisory and systems integration services related tocommercialandotherapplicationsoftheblockchaintechnologyandselectedauxiliarytechnologyproducts.

ThedigitalbusinessstrategyadvisoryandcontentmarketingservicesofferedunderthebrandofTheNative,andthecommercialapplicationsofblockchainandauxiliarytechnologiesrunthroughour5ELBlockchainLabbusinessunitcomprisethecorepartofthenew5ELservicessuitetoday.InthemeantimetheBoardof5ELSAcontinuestoworkthroughtheintegrationplanofthestrongcontentmarketingassetsandtechnologiespurchasedthroughtheAcquisitionTransactionand isscheduledtorelease itsnewmarketpositioningandcorporate identityfor5ELal-readyinOctober2017,uponreceivingthefirstfeedbackfromitsfirstpilotdeploymentofintegratedsetofdigitalmarketingandblockchainapplicationservicesandfullyconsolidatingvariousinterestsacquiredthroughtheAcqui-sitionTransactionasofOctober1,2017.Thisdisclosureislikelytobecombinedwithinformationonafurtheradd-onacquisition(s)tobecompletedby5ELSA.

The5ELBoardhasalsomadeadecisionearlyontoapproachthePulse/HolotrackcomponentoftheAcquisitionTransactionasthespecialsituation,thatisapurchaseofapotentiallyvaluablebutheavilystressedasset.WehavebeenworkingcloselywithournewpartnersinHolotrackAGtoestablishthewaystorecoveror/andgrowtheval-ueofHolotrackinvestmentintoPulseEvolutionCorp,andwehaveretainedtheUSlawfirmMoses&SingerLLPtoassistuswithpotentiallitigationstrategyonthismatter.ThiseffortresultedinthemanagementchangeatPulseEvolutionCorpinsummer2017andsubsequentappointmentofourCompany’srepresentativetoPulseEvolutionCorpboardattheendofSeptemberofthisyear.Wecontinuetoactivelypursuethewaystorecoveror/andgrowthevalueofHolotrackinvestmentintoPulseEvolutionCorp.

ThegroundworkcompletedthroughtheAcquisitionandCapitalIncreaseTransactionsinthethirdquarterof2017,includingstrengtheningourmanagementteamandcreatingincreasinglymorerecognizablepublicprofileforourCompany, paves theway for completion of a transformative add-on acquisition by the Company in the fourth

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quarterofthisyear.TheCompany’sboardhasidentifiedanumberofsuitabletargetsine-commerceservices,me-diaandtechnologyspaceand is intheprocessofthefinalnegotiationprocesswiththeshortlistedtargetscom-binedwithparallelworkontheadequatefinancingpackagethatshouldallowtheCompanypayingforthisacquisi-tionatoptimalterms.

Atthisstageweexpect2017tobetheyearofkeyacquisitions,integrationandstrategicdevelopmentinitiativesthatwillresultincreatingwelldiversified,e-commerceservicesandtechnologybusinessabletosupportcosteffi-cientlybothlargeandmidsizecorporateclientswiththeirexistingandinnovativee-commerceofferings,specifi-callyhelpingwiththeinternationalizationoftheclients’businessmodelsandaddressingnewpocketsofcustomerssuchasmillennialandZgenerationsinacreativeandengagingway.Thefiscalyear2018shouldhelpustoreleasemaximumpotentialfromacquisitions,integrationandtechnicaldevelopmentworkwearedoingtoday.WeexpectthattheCompanyshouldbeinagoodpositiontoofferfairlyaccurateguidancetoits2018financialresultsandkeybusinessobjectivesinearlyDecemberof2017.

Dr.SergeUmansky

ChairmanoftheBoard

5ELSA

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FINANCIALSTATEMENTS

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INCOMESTATEMENT(inthousandsofSwissFrancs)

Unaudited UnauditedForthesixmonthsended 30June2017 30June2016

RestatedTCHF TCHF

Revenue - -Otherincome - -Personnelexpenses - -Administrationandotheroperatingexpenses (369) (324)Depreciation,amortizationandimpairmentlosses - (1)Operatingresult(EBIT) (369) (325)

Financeincome 66 10Financecosts (19) (23)Resultbeforeincometax (322) (338)

Incometax (9) (2)Netresult (331) (340)

Attributableto:OwnersoftheCompany (331) (340)Non-controllinginterests - -Netresult (331) (340)

EarningspershareBasic(CHFpershare) (0.11) (1.36)Diluted(CHFpershare) (0.11) (1.36)

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BALANCESHEET(inthousandsofSwissFrancs)

Unaudited AuditedNotes 30June2017 31Dec2016

TCHF TCHF

ASSETS

CurrentassetsCashandcashequivalent 3 2039 46Tradeandotherreceivables 1979 1937Prepaidexpenses - 8Totalcurrentassets 4018 1991

Non-currentassetsInvestments 4 8000 -Totalnon-currentassets 8000 -

Totalassets 12018 1991

LIABILITIESANDEQUITY

CurrentliabilitiesCurrentfinancialliabilities 1408 1320Tradeandotherpayables 833 563Totalcurrentliabilities 2241 1883

EquitySharecapital 5 10889 10162Treasuryshares (259) (259)Accumulateddeficit (853) (9795)TotalequityattributabletoownersoftheCompany 9777 108Non-controllinginterests - -Totalequity 9777 108

Totalliabilitiesandequity 12018 1991

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CHANGESINEQUITY(inthousandsofSwissFrancs)

Foreign Owners Non-Share Treasury currency Retained ofthe controllingCapital Shares translation earnings Company interests TotalTCHF TCHF TCHF TCHF TCHF TCHF TCHF

Balanceat1January2016(audited) 10162 (259) - (8858) 1045 - 1045

Lossfortheperiod (340) (340) (340)

Balanceat30June2016(unaudited) 10162 (259) - (9198) 705 - 705

Balanceat1January2017(audited) 10162 (259) - (9795) 108 - 108

Capitalreduction (9273) 9273 - -Capitalincrease 10000 10000 10000

Lossfortheperiod (331) (331) (331)

Balanceat30June2017(unaudited) 10889 (259) - (853) 9777 - 9777

Issuedcapital Attributableto

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CASHFLOWSTATEMENT(inthousandsofSwissFrancs)

Unaudited UnauditedForthesixmonthsended 30June2017 30June2016

Notes RestatedTCHF TCHF

CASHFLOWSFROMOPERATINGACTIVITIESProfit/(Loss)fortheyear (331) (340)Adjustmentsfor:

Tax(income)/expense 9 2Financecosts 19 23Financeincome (10) (10)Depreciationandamortizationexpense - 1Unrealisedforeignexchange(gain)/loss (55) -

(368) (324)Movementinworkingcapital

(Increase)/decreaseininventory - -(Increase)/decreaseintradeandotherreceivables 34 (2)Increase/(decrease)intradeandotherpayables 242 (131)

Cashflowgeneratedfromoperations (92) (457)Incometaxespaid - (2)

Netcashfromoperatingactivities (92) (459)

CASHFLOWSFROMINVESTINGACTIVITIESDisposalofsubsidiaries,netofcashdisposedof - -Proceedsonsaleoffinancialassets - -Acquisitionofassociates - -AcquisitionofProperty,plantandequipment - -Interestreceived - -Netcashusedin/frominvestingactivities - -

CASHFLOWSFROMFINANCINGACTIVITIESIncreaseofborrowings 88 -Capitalincrease 2000 -Interestpaid (3) (19)Paymentoffinanceleaseliabil ities - -Netcashusedinfinancingactivities 2085 (19)

Changeincashandcashequivalents 1993 (478)

Cashandcashequivalentsat1January 46 763Effectofmovementsinexchangeratesoncashheld - -Cashandcashequivalentsat30June 2039 285Changeincashandcashequivalents 1993 (478)

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NOTESTOTHEFINANCIALSTATEMENTS

(inthousandsofSwissFrancs,exceptasotherwiseindicated)

Fortheperiodended30June2017

These financial statementswereapprovedby theBoardofDirectors andauthorized for issueon29September2017.

1. BASISOFPREPARATIONANDSIGNIFICANTACCOUNTINGPOLICIES

Thesefinancialstatementscovertheunauditedhalf-yearresultsforthesixmonthsending30June2017.Theyhavebeenprepared in accordance with Swiss GAAP FER (Accounting and Reporting Recommendations). The interim financialstatementsfor2017havebeenpreparedinaccordancewithFER31“SupplementaryRecommendationforListedCom-panies”.

These interim financial statementsdonotcontainall the informationanddisclosures required in theannual re-port.Theyshouldthereforebereadinconjunctionwiththefinancialstatementsasat31December2016.Inthisinterimreport,Managementhasnotmadeanysignificantchangestotheestimatesandassumptionscomparedtothepreviousperiod.

AccountingprinciplesunderSwissGAAPFER,whichhavebeenappliedforthefirsttimeforthepreparationandpresen-tationofthefinancialstatementsfor2016,differinthefollowingrespectfromIFRSreportingstandardsappliedtothefinancialstatementsforthehalf-yearended30June2016:

a) FairvalueofthecontingentconsiderationrelatingtotheacquisitionofK.R.ENERGYSpaShares

Under IFRS theCompanycalculated the fair valueof the contingent considerationbasedon theexchangeconditionsofthesharesoftheCompanyagainsttheK.R.ENERGYshares.ThiscalculationisnomorenecessaryaccordingtothenewaccountingprinciplesunderSwissGAAPFER.

b) Adjustmentmarketinterestrateonconvertibleloan Under IFRS the convertible loan was accounted for using the effective interest ratemethod on initialrecognition.UnderSwissGAAPFERthemethodchosenforfinancialdebtsisamortizedcost.

ThefollowingisasummaryofadjustmentslinkedtothechangeofaccountingprinciplesfromIFRStoSwissGAAPFERappliedtothe30June2016comparativebalancesheet:

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2. EXCHANGERATES

Thefollowingexchangerateswereusedforcurrencytranslation:

Unaudited30June2016 1Jan2016

TCHF TCHF

EquityaccordingtoIFRS 667 985

SwissGAAPFERadjustments

FairvalueofthecontingentconsiderationrelatingtotheacquisitionofK.R.ENERGYSpashares 47 70

Adjustmentmarketinterestrateonconvertibleloan (9) (11)Rounding 1

Totaladjustmentstoequity 38 60

EquityaccordingtoSwissGAAPFER 705 1045

NetresultaccordingtoIFRS (318)

SwissGAAPFERadjustments

FairvalueofthecontingentconsiderationrelatingtotheacquisitionofK.R.ENERGYSpashares

(23)

Adjustmentmarketinterestrateonconvertibleloan 2Rounding (1)

Totaladjustmentstonetresult (22)

NetresultaccordingtoSwissGAAPFER (340)

Closingrate Periodaverage Closingrate Periodaverage Closingrate Periodaverage

EUR 1.1050 N/A 1.0720 N/A 1.0834 N/AUSD 0.9658 N/A

Yearended31December2016 Periodended30June2016Periodended30June2017

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3. CASHANDCASHEQUIVALENTS

Cashandcashequivalentsincludetheproceedsfromthecashpartofthesharecapitalincreaseissuedon14June2017(CHF2million).

4. INVESTMENTSThispositionincludestheinvestmentinTheNativeAGforCHF8million.On20May2017,theCompanyhasenteredintoanagreementfortheacquisitionof100%ofthesharesinBasel-based TheNativeAG. TheNativeAG is currently specialized in designing, building andoperating diverse digitalassetsforinternationalbrandsseekingtoimprovetheircommercialofferingsfortheglobalmillenialaudience,andalsoownsstrategicminorityequityparticipationsinanumberofunconsolidatedentities.The Native AG owns 75% and full operational control of The NativeMedia Inc, a New York based digital andcontentmarketing firm that offers integrated digitalmarketing solutions for its clients in the sport, luxury andentertainmentindustries.TheNativeAGowns33.3%ofHolotrackAG,aPratteln(Switzerland)basedinvestmentholdingcompany,andalsoowns(directlyandthroughHolotrackAG)8.31%ofPulseEvolutionCorporation,aFloridabasedcompanywhoseshares are traded at OTC Bulletin Board in the USA. Pulse Evolution Corporation is the pioneer and leadingdeveloperofhyper-realisticdigitalhumansforholographicliveperformances,virtualrealty,augmentedrealityandartificialintelligence.

AssomeoftheimportantconditionssubsequenttoeachofCapitalIncreaseandAcquisitionTransactionshaveon-lybeencompletedatvariousdatesinAugustandSeptemberof2017,theintegrationofthenewlyacquiredsub-sidiarieshasnotbeencompletedasofthedateofpublication,andspecifically5ELwasnotabletoobtainthecom-pletesetoffinancialinformationtoperformthesub-consolidationoftheNativeAGGroup.Itwasthereforedecid-edbytheBoardtoconsolidatetheNativeAGGroupstartingasof1stOctober,2017,andupuntilthatdateaccountthisasthelongterminvestmentatcost.

ThisacquisitionofTheNativeAGwasanon-cashtransaction:theamountdueonthepurchasewascompensatedby the subscription of the Capital Increase, with the Capital Increase Transaction receiving all the necessarycorporateandregulatoryapprovalsbythedateofthepublicationofthisReport.

5. ISSUEDCAPITAL

Thefollowingisananalysisoftheissuedcapital:

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Sharecapital

Fullypaidinshares

As of 30 June 2017 the Company’s share capital amounts to CHF 10’889’165, consisting of 3’111’190 ordinarybearershareswithanominalvalueofCHF3.50each,allfullypaidin,foratotalamountofTCHF10’889.Fullypaidordinarysharescarryonevotepershareandcarryarighttodividends.

Attheshareholders’generalmeetingheldon14June2017,theshareholdersacceptedtheBoard’sproposaltore-ducethesharecapitaloftheCompanyfromCHF10’161’920toCHF889’168byareductionofthenominalvalueofeachsharefromCHF40.00toCHF3.50.ItwasalsodecidedtoincreasethesharecapitalofCHF9’999’997byissu-ing2’857’142newordinarybearershareswithanominalvalueofCHF3.50each.Thecapital increasehasbeencompleted in cash for CHF 1’999’998 and by the setting off the amount payable resulting from theAcquisitionTransaction(thepurchaseofthe100%ownershipinterestinTheNativeAGforCHF7’999’999).

Treasuryshares

Asof30June2017theCompanyowns4’508treasuryshares(31December2016:4’508)foratotalamountatcostofTCHF259(31December2016:TCHF259).Notreasurysharesweresoldduringthecurrentandprioryear.

Conditionalcapitalincreases

On14June2017theAnnualGeneralMeetingoftheShareholdersunanimouslyresolvedthefollowing:

• Aconditional share capital increaseup to amaximumof TCHF98by the issuanceofmaximum28’000bearershareswithaparvalueofCHF3.50each,inconnectionwiththeexerciseoftheconversionrightgrantedtotheholderoftheconvertibleloan.Thepreferentialrightoftheexistingshareholdersrelatedtothesubscriptionofthesharesofthisconditionalsharecapitalincreaseisexcluded.

• AconditionalsharecapitalincreaseuptoamaximumamountofTCHF5’081bytheissuanceofmaximum1’451’702bearershareswithaparvalueofCHF3.50each,inconnectionwiththeconversionrightstobegrantedunderanexpectedfutureissuanceofaconvertiblebondorsimilarinstrument.Thepreferential

Number Ordinary Treasuryofshares shares Shares Total

TCHF TCHF TCHF

Balanceat1January2016 254048 10162 (259) 9903

Movements2016 -

Balanceat31December2016 254048 10162 (259) 9903

Capitalreduction (9273) - (9273)Capitalincrease 2857142 10000 - 10000

Balanceat30June2017(unaudited) 3111190 10889 (259) 10630

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rightof theexistingshareholdersrelatedtothesubscriptionof thisconditionalsharecapital increase isneitherlimitednorexcluded.

• During2016andthefirstSemester2017therehasbeennoissuanceofsharesresultingfromthesedeci-sions.

6. SIGNIFICANTEVENTSANDBUSINESSTRANSACTIONS

On18July2017,5ELcompletedthepurchaseof33.3%ownershipinterestinHolotrackAG,Pratteln,Switzerland,throughTheNativeAG.HolotrackAGisthespecialpurposeinvestmentvehiclebasedinPratteln,SwitzerlandthatisasignificantshareholderandcreditorofPulseEvolutionCorporation.

5ELSABoardmeetingheldon1September2017hasapprovedexpansionof5ELintocommercialapplicationsofblockchaintechnologyinsports,entertainment,personalfinanceandartindustryspacethroughanintroductionofthenewbusinessunitnamed5ELBlockchainLab.

On28September2017theCompany’srepresentativehadbeenelectedtoeachoftheboardsofHolotrackAGandPulseEvolutionCorpallowingtheCompanytoexercise its informationandgovernancerights resulting fromtheAcquisitionTransaction.

7. SUBSEQUENTEVENTS

Atthepublishdateofthispressrelease,thecompanyisnotawareofanysignificantneweventthatwouldaffectthehalf-yearfinancialstatementsasof30June2017.

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COMPANYPROFILEBoardofDirectorsSergeUmansky,ChairmanBrianMcConville,MemberAndreasBenz,Member(resignedon6August2017tocomplywithourinternalconflictsofinterestpolicy)

ManagementBoardIzabelaDepczyk,CEOVictorIezuitov,CFO

PostalAddress5ELSA,RueduGrand-Chêne8,1003Lausanne

AuditorsBerneyetAssociésSASociétéFiduciaire,1002Lausanne

ReportingTheBoardofDirectors

CustodianBankBANQUELOMBARDODIER&CieSA,LausanneBranch,1003Lausanne

PublicationsInterimreporton30June

TickerSymbolsBloomberg FELSWEquityTelekurs FELSecuritynumber 632.685ISIN CH0006326851

InvestorRelationsVictorIezuitov,5ELSA,RueduGrand-Chêne8,1003LausannePhone:+41216206470E-mail:viezuitov@5el.chwww.5el.ch