I am writing on behalf of the Board to update you on the latest
position.

At our meeting on the 4th January, we discussed with Sport England a
number of different options we might explore to help us secure a
stable financial position going forward. One of the options open to
us was entering into a Corporate Voluntary Agreement (CVA) with
Karate England's creditors. Sport England had told us that one of the
precursors to resuming funding was that we devise a recovery plan
which would have the effect of creating a zero balance on Karate
England's finances.

The Board sought advice on the CVA from three insolvency companies
and this highlighted the risk of entering into a CVA which would
quite likely fail due to the lack of certainty regarding income,
taking in to account the Sport England position on financial input
into a CVA and with Sport England funding not being reinstated. In
addition, it is clear that members are not prepared to commit further
registrations in the current situation.

We therefore believed the only viable option was that we inform all
member associations, creditors and Sport England that Karate England
2005 Ltd should cease to trade and we notified Sport England of this
decision on Friday and informed them that we would make a public
announcement after the weekend . This is the course we have been
advised to follow and we have done this with great reluctance.

We continue to recognise the importance and need for a National
Governing Body for Karate and are proposing a new approach to Sport
England which we believe could meet the need of Karate in the future,
meet Sport England requirements and command broad support from the
Karate family in England.

We believe this is best way forward and we will provide further
details in the next few days and hope to have the opportunity to
discuss the issues in full on 18 February.

Yours sincerely,


Bob Poynton
Karate England Company Secretary

31 January 2007