January- June 2008 Interim Report

• Net sales in the first sixth months of 2008 amounted to SEK 76 million (86). The same period during 2007 included a 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. Second quarter net sales were SEK 41 million (30).

• The gross margin for January – June was 73% (73) and the gross profit SEK 55 million (63). Adjusted for the non-recurring revenue in connection with the U.S. business and the revenue from DNP, the gross profit increased by SEK 22 million. Second quarter gross margin was 76 % (65) and the gross profit was SEK 31 million (20).

• Excluding depreciation, write-downs and amortization, the loss in the first half-year was SEK -18 million (5). For the second quarter it was SEK -5 million (-10).

• The first half-year loss after tax was SEK -28 million (-4). The second quarter there was a loss of SEK -15 million (-13).

• Earnings per share for the first half-year were SEK -0,23 (-0,03). The second quarter earnings were SEK -0,11 (-0,10).

• The cash flow during the first half-year amounted to SEK -57 million (-12). The second quarter cash flow amounted to SEK -36 million (-2).

Summary of the activities during the second quarter

• At the end of June, with effect from July first, Anoto signed a joint venture agreement with Hitachi Maxell concerning the Japanese and Asian markets and acquired the Hitachi Maxell digital pen division. This will give us increased sales and profits as we now controls the major part of the value chain (pen, license and pattern).

• In April Anoto entered into an agreement with a world leading global manufacturer of visual communication products in areas such as whiteboards and flipcharts. Anoto will deliver technology and digital pens for future products. The initial order value is approximately EUR 800,000. In July an agreement was signed with Group Hamelin at an initial order value of EUR 950.000. In early August a further agreement at a contract value of EUR 500.000 was entered.

• Imaging Technology continues to show strong growth during 2008.

• Anoto has signed a contract with software developer Covelus about acquiring the company’s routing technology. According to the contract Anoto buys the source code for Covelus’ router in order to further develop it and to improve availability for AFS and other future products.

• Anoto Partner Livescribe has begun its national retail rollout for the Pulse™ smartpen, which is now available at Target, Target.com, Amazon.com, and major college and university bookstores supported by Douglas Stewart.

Investments for the future during the first half of 2008, such as the development of the next generation digital pen, new products, the acquisition of Covelus router technology together with a substantial increase in inventory have reduced our available cash by SEK 31 million, in addition to normal changes in working capital and the loss for the period.
Since the end of last year we offer our Forms Solutions package, which is a complete product, including pen, software and pattern. The increased inventory is in line with this product-offering and the agreement regarding the acquisition of Hitachi Maxell digital pen division is part of that.

For more information

Anders Widesjö
CFO
+46 46 540 12 34