Year ended 31. December 2007

Year ended 31. December 2006

Note

Revenues

Sales

3

1 964 371

2 616 780

Operating Cost

Cost of goods sold

1 221 395

2 350 407

Net other gains

Salaries/social expenses 

7

1 314 020

3 824 592

Depreciations

10,11

912 888

1 520 713

Write down

11

5 535 303

21 216 731

Other operating cost

8

9 123 739

11 909 494

Total operating cost

18 107 345

40 821 937

Operating/(loss)/profit

(16 142 974)

(38 205 157)

Financial items

Net financial items

33 547

(331 144)

Result before income tax

(16 109 428)

(38 536 301)

Income tax expense

13

(1 853)

1 087 615

(Loss)/profit for the year

(16 111 281)

(37 448 686)

(Loss)/earnings per share basic

15

(0.318)

(0.740)

(Loss)/earnings per share diluted

15

(0.318)

(0.719)

31. December 2007 

 31. December 2006 

 Note 

 Assets 

 Non-current assets 

 Production equipment 

10 

   0 

  1 148 812 

 Goodwill 

11 

   0 

  4 370 850 

 Other intangible assets 

11 

  0 

  453 666 

 Long term receivables 

  0 

  1 056 901 

 Deposits 

5 

  276 740 

  278 862 

 Total non-current assets 

   276 740 

7 309 091 

 Current assets 

 Inventory 

6 

  151 855 

  581 475 

 Trade and other receivables 

  970 756 

  471 789 

 Cash and cash equivalents 

5 

  566 734 

  9 235 152 

 Total current assets 

  1 689 345 

10 288 416 

 Total assets 

1 966 085   

  17 597 507 

Equity and liabilities

 Equity 

 Paid in capital 

 Share capital 

  1 264 914 

  1 264 914 

 Share premium 

  51 054 824 

  52 329 824 

 Other contributed equity 

  1 767 945 

  11 272 003 

 Total paid in equity 

  54 087 683 

  64 866 741 

 Other equity 

  (54 783 277)

    (49 451 054)

 Sum other equity 

  (54 783 277)

  (49 451 054)

 Total Equity 

  (695 594) 

  15 415 687 

 Liabilities 

 Non-current liabilities 

 Deferred tax liabilities 

13 

  0 

  0 

 Current liabilities 

 Trade payables 

  664 483 

  1 164 796 

 Public dues and taxes 

  71 151 

  221 917 

 Other current liabilities 

  1 926 045 

  795 107 

 Total liabilities 

  2 661 679 

  2 181 820 

 Total equity and liabilities 

  1 966 085 

  17 597 507 

Share capital

Share premium

Other contributed equity

Other equity

Equity

Equity at 01.01.2006

     1 222 414 

    52 354 824 

  9 825 444 

  (12 002 368)

   51 400 314 

Issue share capital

     25 000 

(25 000)

Option program

  1 446 559 

    1 446 559 

Share issue - option

     17 500 

    17 500 

Result for the period

  (37 448 686)

 (37 448 686)

Equity at 31.12.2006

    1 264 914 

  52 329 824 

  11 272 003 

  (49 451 054)

 15 415 687 

Result for the period

(16 111 281)

 (16 111 281)

Equity at 31.12.2007

 1 264 914 

52 329 824 

11 272 003 

  (65 562 335)

(695 594)  

Year ended 31. December 2007

Year ended 31. 

December 2006

Cash outflow from operating activities

Result before tax

  (16 111 281)

  (38 536 301)

Ordinary depreciation

  912 888 

  1 520 713 

Write down

   5 535 303 

  21 216 731 

Expensed options

  0 

  449 535 

Change in trade receivables

  (498 967)

  4 641 852 

Changes in trade payables 

  (500 313)

  (991 509)

Other changes

  2 468 815 

  (1 145 768)

Net cash outflow from operating activities

   (8 193 554)

  (12 844 747)

Cash flow from investing activities

Purchase of property, plant and equipment

   (474 864)

  (791 202)

Purchase of other current assets

   0 

  0 

Net cash outflow from investing activities

   (474 864)

  (791 202)

Cash flow from financing activities 

Proceeds from issuance of ordinary shares

   0 

  17 500 

Net inflow from financing activities

   0 

  17 500 

Net change in cash and cash equivalents

   (8 668 418)

  (13 618 449)

Cash and cash equivalent at the beginning of the  period

   9 235 152 

  22 853 601 

Cash and cash equivalent at the end of the period

   566 734 

  9 235 152 

1 General information

MultiPower ASA ('the Company') and its subsidiaries, Jumpit Manufacturing AS and Jumpit Business Development AS (together 'the Group'), develops, and distributes disposable and rechargeable batteries for handheld electronic devices. The market for the company is world wide. The company has a production agreement with Dunggan Pacific Cheery Electronics LTD in China.

The Company is a limited liability company incorporated and domiciled in Norway with it's headquartering at Snarøya, outside Oslo.

The Company has its listing on AIM at the London Stock Exchange.

These group consolidated financial statements were authorised for issue by the Board of Directors on 2 May 2008 

    2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis for preparation:

The consolidated financial statements of MultiPower ASA have been prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in the report.

Consolidation

Subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies of the company generally accompanying a shareholder of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of the acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of the exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the Company and subsidiaries will be changed when necessary to ensure consistency with the policies adopted by the Group.

Segment reporting

A business segment is a group of assets and operations engaged in providing products or services, that is subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments.

Foreign currency translation

• Functional and presentation currency.

The companies in the Group are based in Norway with NOK as a basis currency. Income is mainly in foreign currency dominated by US dollars and operating costs are in NOK, the same as last year. The Group is mainly financed by bank deposits in NOK. The Group's management has, based upon a total evaluation of IAS 21 decided to use NOK as functional currency.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Property, plant and equipment

Furniture, fittings and equipment comprises production equipment in the factory in China and office equipment.

All property, plant and equipment are stated at historical costs less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Production equipment     3 years

Office equipment               3 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An assets' carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/associate at the date of the acquisition. 

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses are not reversed. The allocation is made to those cash-generating units or groups of cash generating units that are expected to benefit from the business combination in which the goodwill arose.

Acquired intangible assets such as patents and licenses are shown, and are capitalised on the basis of the costs incurred to acquire the patents and licenses. Amortisation is calculated using the straight-line method to allocate the cost of patents and licences over their useful lives (10 years)

Trade receivables

Trade receivables are recognised initially at fair value less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered as indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.

Inventory

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. 

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowing in current liabilities on the balance sheet.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Costs related to issue of shares or options regarding mergers and acquisitions are included in acquisition costs.

Taxation

Total taxes in the income statement include payable taxes and changes in deferred taxes. Deferred income tax is calculated based on the actual tax rate based on the temporary differences that exists between accounting and tax able values and losses carried forward by the end of the accounting year. Tax increasing and tax reducing temporary differences which are being reversed or can be reversed in the same period is settled.

Deferred income tax on temporary differences that are not settled and losses carried forward is based on the expectation of future earnings. Deferred income tax that can be booked to the balance sheet is booked as a net amount.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary difference can be utilised.

Provisions

Provisions are accounted for when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. No provisions are made for future losses.

Revenue recognition

Revenue comprises the fair value for the sale of goods and services, net of value-added tax, rebates and discounts and after eliminated sales within the Group. Revenue is recognised as follows:

• Licence fees

Licence fees are accounted for regularly in accordance with the licence agreement. 

                b.        Sales of goods

Sales of goods are recognised when a Group entity has delivered the products to the customer; the customer has accepted the products and collectibles of the related receivables are reasonably assured.

 Where goods are sold with a right of return accumulated experience is used to estimate and provide for such returns at the time of sale.

Research and development

Costs related to research are charged to the income statement when they occur. Development costs related to projects are classified as intangible assets when it is probable that the project will give future economic benefits. The condition being that the project can be commercialised, is technological viable and that the cost can be measured reliably. Other development costs are charged to the income statement when they occur. Development costs that have been charged to the income statement will not be transferred to the Balance Report in later periods. Development costs charged to the Balance Report are amortised linearly over the expected life time of the economic benefits starting at the time of commercialisation.

All research and development costs are charged to the income statements when they occurred in 2006 and 2007.

Financial risk

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk and liquidity risk

Market risk

The Group is exposed to changes in the currency rates as an important part of the revenues are denominated in foreign currency. The Group is not exposed to changes in the interest rates as the Group do not have any interest bearing debt.

Credit risk

The risks associated to non payment from customers are considered low taken into account historical experience. The trade and other receivables accounted for NOK 1.0 million for by year end 2007 compared to NOK 0.5 million in 2006. 

Liquidity risk

The Group consider the liquidity situation not to be satisfactory. The Group had cash and cash equivalent of NOK 0.6 million by period end, compared to NOK 9,2 million in 2006. The liquidity consists of bank deposits. 

Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

2007

2006

Markets

Europe

1 964 370

2 616 780  

Total revenue

1 964 370

2 616 780

2007

     2006

Finished goods

                    151 855  

581 475

2007

2006

Salary expenses

1 149 149

           3 598 909

Social security expenses

162 594

193 415

Other personnel expenses

2 277

32.268

Total personnel expenses

1 314 020

3 824 592

Average full-time equivalents

1

1

2007

2006

Fees for audit services

215 080

145 000

Fees for tax advisory services

70 700

53 000

Fees for other attestations

0

0

Fees for other services

0

306 250

(NOK)

2007 

2006 

Consultancy services

3 969 867

6 350 126

Product development / patent costs

367 296

912 517

Other administrative costs

4 786 576

4 646 851

Total

9 123 739

11 909 494

9. Share option programme

The Share option programme

Share options are granted to members of the Board, employees and close associates. The options have duration of two years from the issue date. At the date of issue, there are no conditions related to the exercise of the options with the consequence that the costs (fair value) are charged directly to the P&L. Options shall be exchanged for shares in the company. The company has no obligation of legal or other reasons to buy back or otherwise settle the options in cash.

Estimation of fair value

The fair value of the options is calculated using the Black-Scholes option pricing model. The assumptions for the model are that the company is not paying any dividends and that the options are exercised on the exercise date. Furthermore, the volatility is a variable that will effect the calculation. 50 % volatility is used, as this is considered the best estimate regarding the underlying conditions in the period. Risk free interest varies in the model, as the issue of the options has taken place at different dates. The interest used is in the interval of 2.7 % - 5.0 %.

The charge to the accounts under salaries and social expenses for 2006 is NOK 449 535. 

2006

Opening net book amount

      1 398 654 

Additions

         791 202 

Depreciation charge

      1 041 044 

Closing net book amount

      1 148 812 

At 31 December 2006

Cost

  4 056 413 

Accumulated depreciation

  2 907 601 

Net book amount

  1 148 812 

2007

Opening net book amount

      1 148 812 

Additions

          474 451 

Depreciation change

Write down

          766 556 

  856 707 

Closing net book amount

                      0 

At 31 December 2007

Cost

      4 530 864 

Accumulated depreciation

      4 530 864 

Net book amount

                      0 

2007

2006

Income taxes payable

1 853

0

Change in deferred tax

0

(1 087 615)

Income tax expense

1 853

(1 087 615)

Deferred tax asset

Property, plant and equipment

(866 194)

(451 993)

Trade and other receivables

(183 308)

(652 503)

Carry forward of unused tax losses

(13 472 336)

(10 247 369)

Tax effect of total temporary differences

(14 521 838)

(11 351 865)

Net deferred tax asset

(14 521 838)

(11 351 865)

Valuation allowance

14 521 838

11 351 865

Deffered tax capitalized

0

0

Deferred tax asset is not capitalized due to uncertainty regarding future profits.

Expiry date for carry-forward of unused tax losses is unlimited.

Explanation to changes in deferred tax

Opening balance

0

1 087 616

Deferred tax from aquisition

0

0

Change in deferred tax in income tax expense

0

(1 087 616)

Ending balance deferred tax

0

0

Reconciliation of taxes to income statement

Profit before tax 

(16 109 428)

(38 536 301)

Tax 28 %

(4 510 640)

(10 790 164)

Taks effect from: 

Permanent differences

 735 042

5 281 090

Not recognized change in deferred tax

3 777 451

4 421 460

Calculated income tax expense

1 853

(1 087 614)

Loss per 

Earnings per share basic

Annual result divided by no of shares

Share NOK

Year end 31.December 2007

NOK(16 111 281)/50 596 570

(0.318)

Year end 31.December 2006

NOK(37 448 686)/50 596 570

(0.740)

Earning per share diluted

Annual result divided by no of shares and options

Year end 31.December 2007

NOK(16 111 281)/50 595 570

(0.318)

Year end 31.December 2006

NOK(37 448 686)/52 109 330

(0.719)