Anoto Group AB: January – March 2008 Interim Report

• First quarter sales were SEK 34 million (56). Sales in the first quarter of 2007 included non-recurring revenue of SEK 37 million in connection with the settlement when divesting our U.S. subsidiary, as well as revenue from DNP in Japan.

• The group's first quarter gross margin was 69% (78) and its gross profit was SEK 24 million (44). Adjusted for the non-recurring revenue in connection with the U.S. business and the revenue from DNP, the gross profit increased by SEK 10 million.

• Excluding depreciation and amortization, the loss for the first quarter was SEK -10 million (15).

• The first quarter loss after tax was SEK -13 million (9).

• Earnings per share for the first quarter were SEK -0.10 (0.07).

• First quarter cash flow was SEK -22 million (-10).


Operations

• First quarter sales were in line with the company's plans for 2008. However a change in the product mix led to a weaker margin.

• Anoto entered in April into an agreement with a world-leading global manufacturer of visual communication products in such areas as whiteboards and flipcharts. As a result of the contract, Anoto will deliver technology and digital pens for use in future products. The initial value of the order corresponds to revenue of approximately EUR 800,000.

• In spite of the slower growth of the mobile phone market we expect that the Imaging Technology area will have a strong growth during 2008.

• Early April, Anoto and OKI previewed Anoto PenPresenter, a new product scheduled for September launch.

• In cooperation with Vision Objects, the company launched the second version of its proprietary Forms Solution 1.1 (AFS 1.1) platform, which offers expanded functionality when it comes to character recognition and other uses.


• The Anoto Partner Leapfrog launched its next-generation reading system, Tag Reading System, expected to be available in stores this summer.

• The American Partner Livescribe presented its new consumer pen, Pulse, based on Anoto technology and with a built-in microphone and speaker.

A word from CEO Anders Norling

Sales and earnings continue to improve

Operations performed in line with our plans during the first quarter. Excluding non-recurring revenue of SEK 37 million in the first quarter of 2007 in connection with the divestment of our U.S. subsidiary (now Livescribe) and major revenue from our Japanese partner DNP, sales rose by 84% and the gross profit improved substantially.

We changed the names of Anoto's application areas to more clearly describe their current and future activities. Anoto Products (formerly Forms Solutions and C Tech) and Imaging Technology (formerly Anoto Technology), our two biggest application areas, performed according to plan, i.e., approximately 25% higher volumes for Anoto Products and three times the previous volumes for Imaging Technology. The latter increase was due to greater use of our video technology in mobile phones and other products.

We accelerated development of next-generation digital pens during the first quarter. We will pursue the effort throughout 2008 and we have scheduled the launch for mid-2009. SEK 8 million of the SEK 30 million total estimated costs has been invested so far.

Our focus on the packaging of products and offerings is proceeding as planned, our goal being to sell licenses and digital pens as an integrated product. In the future, Anoto will obtain its product revenue at the time of sale.

The development of proprietary and partner-based products has led to Anoto PenPresenter, a new product that uses Anoto technology as an interactive meeting room tool and to make PowerPoint presentations more effective.

Anoto entered into a first quarter agreement with a global company for development of visual communication. One sphere of application may be the digitalisation of what is written on whiteboards, flipcharts, etc. in conference rooms. In the future, we will deliver patterns and digital pens in addition to technology. Anoto technology has been evaluated over the course of a year. Both Anoto and our partner believe that the technology has major potential in the area of visual communication.

For complete report, see attached file.

For more information

You are welcome to participate in Anoto's teleconference for financial analysts and the media at 10.00 CET on 7 May 2008.

Date:
Wednesday, 7 May 2008

Time:
10.00 CET

Phone:
+44 (0) 20 7162 0025

Specify:
Anoto

Or call:
Anders Widesjö, CFO
+46 46 540 12 34

Anoto Group AB's 2007 annual report is available at www.anoto.com. A printout of the digital version may be ordered from the company.



Anoto Group AB may be required to disclose the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 08.30 am on May 7th, 2008.