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					                             Prospectus




Prospectus for the listing of 52,233,235 New Shares on Oslo Axess, each with a
   nominal value of NOK 0.20 per share, issued in a Private Placement at a
                   subscription price of NOK 0.20 per share




       THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO BUY,
             SUBSCRIBE OR SELL THE SECURITIES HEREIN




                                 Managed by




                                 May 7, 2009
                                             IMPORTANT INFORMATION
This Prospectus has been prepared in connection with the listing of new shares issued in the private placement in Aqua Bio
Technology ASA (“the Company”) on Oslo Axess as described in section 4 below. The Prospectus has been prepared to comply
with the Norwegian Securities Trading Act and the applicable EU-regulations. Oslo Børs has reviewed and approved this
Prospectus in accordance with the Norwegian Securities Trading Act Section 7-7. This Prospectus has been published in an
English version only.

All inquiries relating to this Prospectus should be directed to the Company or to VentureLab AS (the “Manager”). No other
person has been authorized to give any information about or make any representation on behalf of the Company in connection
with the listing of the new shares, and, if given or made, such information or representation must not be relied upon as having
been authorized by the Company or the Manager.

The information in the Prospectus is of the date hereof and is subject to change, completion and amendment. Any new material
information and any material inaccuracy that might have an effect on the assessment of the Shares arising after the date of
publication of this Prospectus will be published and announced as a supplement to this Prospectus in accordance with Section 7-
15 of the Norwegian Securities Trading Act. Furthermore, the Company has, from its listing on Oslo Axess January 9, 2008,
been obligated to publish information on Oslo Stock Exchange’s information system and on the Company’s internet site in
accordance with the Oslo Axess Regulations. Announcements relating to the matters described in this Prospectus will be
considered to have been made once they have been received by Oslo Axess and distributed through its information system.

The distribution of this Prospectus may be restricted by law in certain jurisdictions. No action has been or will be taken in any
jurisdiction other than Norway by the Manager or the Company that would permit the possession or distribution of the Prospectus
in any jurisdiction where specific action for that purpose is required. Persons into whose possession this Prospectus may come
are required by the Company and the Manager to inform themselves about and to observe such restrictions.

The contents of this Prospectus are not to be construed as legal, business, financial or tax advice. Each prospective investor
should consult its own legal advisor, business advisor, financial advisor or tax advisor as to legal, business, financial and tax
advice.

This Prospectus shall be governed by Norwegian law, and any disputes relating to this Prospectus are subject to the exclusive
jurisdiction of Norwegian courts, with Oslo District Court as legal venue in the first instance.

Each prospective investor and applicant must comply with all applicable laws and regulation in force in any jurisdiction in which it
purchases, applies for, offers or sells the new shares or possesses or distributes this Prospectus and must obtain any consent,
approval or permission required for acquiring new shares. Each purchaser of new Shares will be deemed to have
acknowledged, by its application for Offer Shares that the Company and the Manager and their respective affiliates and other
persons will rely on the accuracy of the acknowledgements, representations and agreements set forth herein.

All inquiries relating to this Prospectus or the matters addressed herein should be directed to the Company or the Manager. No
persons other than those described in this Prospectus have been authorized to disclose or disseminate information about this
Prospectus or about the matters addressed in this Prospectus. If given, such information may not be relied upon as having been
authorized by the Company. Norwegian law shall govern this Prospectus, and any disputes relating to this Prospectus or the
listing of New Shares are subject to the sole jurisdiction of Norwegian courts, with Oslo District Court as legal venue.

Investing in the Company’s Shares involves risks. See section 2 ”Risk Factors” of this
Prospectus.
CONTENTS

1      SUMMARY .............................................................................................................................................. 5
1.1    Information about the Company .............................................................................................................. 5
1.2    The Private Placement ............................................................................................................................ 7
1.3    Summary of Risk Factors ........................................................................................................................ 8
1.4    Summary of Operating and Financial Information ................................................................................... 8
1.5    Major Shareholders and Related Party Transactions ............................................................................ 10
1.6    Patents, Licenses and IPR .................................................................................................................... 11
1.7    Advisors and Auditors ............................................................................................................................ 12
1.8    Documents on display ........................................................................................................................... 12
2      RISK FACTORS .................................................................................................................................... 13
2.1    Market Risk............................................................................................................................................ 13
2.2    Operational Risks .................................................................................................................................. 13
2.3    Financial Risk Factors ........................................................................................................................... 14
2.4    Other Risks ............................................................................................................................................ 14
2.5    Risks Related to the Shares .................................................................................................................. 15
3      RESPONSIBILITY STATEMENTS ........................................................................................................ 16
3.1    The Board of Directors........................................................................................................................... 16
3.2    Statement by the Manager .................................................................................................................... 16
3.3    Forward Looking Statements ................................................................................................................. 16
4      DETAILS OF THE PRIVATE PLACEMENT .......................................................................................... 17
4.1    Purpose of the Private Placement ......................................................................................................... 17
4.2    Resolution.............................................................................................................................................. 17
4.3    The Private Placement .......................................................................................................................... 17
4.4    Share capital before and after the Private Placement ........................................................................... 18
4.5    Settlement, VPS-registration, transferability and trading of the New Shares on Oslo Axess ................. 19
4.6    Rights conferred by the new shares ...................................................................................................... 19
4.7    Dilution................................................................................................................................................... 19
4.8    Share registrar and securities number ................................................................................................... 19
4.9    Legislation ............................................................................................................................................. 19
4.10   Manager ................................................................................................................................................ 19
5      COMPANY INFORMATION .................................................................................................................. 20
5.1    General .................................................................................................................................................. 20
5.2    Corporate Structure ............................................................................................................................... 20
5.3    History and Development ...................................................................................................................... 20
5.4    Vision and Strategy................................................................................................................................ 21
5.5    The Products and the Technology ......................................................................................................... 22
5.6    Patents, Trademarks and other IPR ...................................................................................................... 24
5.7    Research and Development Strategy .................................................................................................... 25
5.8    Key Competitive Advantage .................................................................................................................. 25
5.9    Regulatory Approval .............................................................................................................................. 25
5.10   Property, Fittings and Equipment .......................................................................................................... 26
5.11   License Agreements .............................................................................................................................. 26
6      MARKET OVERVIEW ........................................................................................................................... 27
6.1    HBA (Health and Beauty Aids) .............................................................................................................. 27
6.2    Key Players ........................................................................................................................................... 28
6.3    Competitors ........................................................................................................................................... 28
7      BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE ........ 29
7.1    Incorporation of the Company ............................................................................................................... 29
7.2    Articles of Association – Board and Management ................................................................................. 29
7.3    Board of Directors .................................................................................................................................. 29
7.4    Executive Management ......................................................................................................................... 31
7.5    Incentive Programs ................................................................................................................................ 32
7.6    Conflicts of Interest etc. ......................................................................................................................... 32
7.7    Employees and Consultants .................................................................................................................. 33
7.8    Pension Obligations ............................................................................................................................... 33
7.9    Fraudulent Offence, Bankruptcy etc ...................................................................................................... 33
7.10   Corporate Governance .......................................................................................................................... 34
8      OPERATING AND FINANCIAL INFORMATION ................................................................................... 35
8.1    Summary of Significant Accounting Principles....................................................................................... 35
8.2    Critical Accounting Estimates and Judgments ....................................................................................... 40
8.3      Historical Consolidated Financial Information ........................................................................................ 40
8.4      Significant Changes in the Company’s Financial or Trading Position since December 31, 2008 .......... 45
8.5      Trends ................................................................................................................................................... 45
8.6      Investments ........................................................................................................................................... 45
8.7      Information on Holdings ......................................................................................................................... 46
8.8      Capital Resources ................................................................................................................................. 46
8.9      Working Capital Statement .................................................................................................................... 48
8.10     Funding and Treasury Policies and Objectives...................................................................................... 48
8.11     Statutory Auditor .................................................................................................................................... 48
9        SHARES AND SHARE CAPITAL .......................................................................................................... 49
9.1      General .................................................................................................................................................. 49
9.2      Share Capital ......................................................................................................................................... 49
9.3      Development of Share Capital ............................................................................................................... 49
9.4      Outstanding Authorizations.................................................................................................................... 49
9.5      Own Shares ........................................................................................................................................... 50
9.6      Ownership Structure .............................................................................................................................. 50
9.7      Major Shareholders and Noticeable Shareholdings ............................................................................... 51
9.8      Dividend Policy ...................................................................................................................................... 51
9.9      Articles of Association............................................................................................................................ 52
9.10     Statutory Auditor .................................................................................................................................... 52
9.11     Related Party Transactions ................................................................................................................... 52
10       SHAREHOLDER MATTERS ................................................................................................................. 54
10.1     Transfer of Shares ................................................................................................................................. 54
10.2     Disclosure Requirements....................................................................................................................... 54
10.3     Mandatory Filing Requirements ............................................................................................................. 54
10.4     Mandatory Bid Requirement .................................................................................................................. 55
10.5     Compulsory Acquisition ......................................................................................................................... 55
10.6     Voting Rights ......................................................................................................................................... 56
10.7     General Meetings of Shareholders ........................................................................................................ 56
10.8     Additional Share Issuances and Preferential Rights .............................................................................. 56
10.9     Dividends ............................................................................................................................................... 57
10.10    Change of the Rights of Holders of Shares ........................................................................................... 57
10.11    Redemption and Conversion Rights ...................................................................................................... 57
10.12    Rights on Liquidation ............................................................................................................................. 57
10.13    Reports to Shareholders ........................................................................................................................ 57
10.14    Notification and Publication Requirements ............................................................................................ 58
11       TAX INFORMATION.............................................................................................................................. 59
11.1     General .................................................................................................................................................. 59
11.2     Norwegian Shareholders ....................................................................................................................... 59
11.3     Non-Resident Shareholders .................................................................................................................. 60
11.4     Duties on the Transfer of Shares ........................................................................................................... 61
11.5     Inheritance Tax ...................................................................................................................................... 61
12       LEGAL AND ARBITRATION PROCEEDINGS ...................................................................................... 62
13       ADDITIONAL INFORMATION ............................................................................................................... 63
13.1     Documents on Display ........................................................................................................................... 63
13.2     Third party information ........................................................................................................................... 63
14       DEFINITIONS AND GLOSSARY ........................................................................................................... 64

Appendices:
Appendix 1         Articles of Association for Aqua Bio Technology ASA
Appendix 2a:       Aqua Bio Technology’s (formerly Kilda Biolink) Annual Report for 2006 (IFRS) with Auditor’s
                   report (Translated version)
Appendix 2b:       Kilda Biolink’s (former Aqua Bio Technology AS) Annual Report for 2006 (NGAAP) with
                   Auditor’s Report (Translated version)
Appendix 3:        Aqua Bio Technology’s Annual Report for 2007 (IFRS) with Auditor’s Report (Translated
                   version)
Appendix 4:        Aqua Bio Technology’s Annual Report for 2008 (IFRS) with Auditor’s Report (Translated
                   version)




                                                                              4
1            SUMMARY
NOTE: This summary should be read as an introduction to the Prospectus and any decision to invest should be
based on consideration of the Prospectus as a whole by the investor, including the documents incorporated by
reference and the risks of investing set out in “Risk Factors”. This summary is not complete and does not contain
all the information that you should consider in connection with any decision relating to the Shares. Where a claim
relating to the information contained in this Prospectus is brought before a court, the plaintiff might under the
applicable legislation have to bear the costs of translating the Prospectus before the legal proceedings are
initiated. No civil liability will attach to the board of directors of Aqua Bio Technology ASA in respect of this
summary, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this
Prospectus.



1.1          Information about the Company
Business Description
Aqua Bio Technology ASA (“the Company”) is an independent developer and manufacturer of patented
ingredients and technology to the cosmetic industry.

The international cosmetic market for skin-products is estimated at over USD 100 billion per year. The market for
products profiled as based on natural ingredients and products profiled as having a physiological effect in addition
to being a cosmetic product is alone estimated to more than USD 25 billion annually. The Company operates in
this market as a provider of raw materials and technology with documented properties.

Products
The Company’s products are based on novel marine ingredients derived from the pure and protected environment
of Norwegian waters.

      •   The enzyme Zonase is a safe cosmetic ingredient derived from the hatching fluid of salmon. It gently
          removes dead cells in the outer layer of the skin, initiating and accelerating the skin’s renewal and
          healing process. Zonase provides safe and effective exfoliation of skin without the inflammations often
          associated with acids used in cosmetics today. Zonase was developed by the University of Bergen.
      •   The Smids technology allows customizing the melting point of ointments without altering the water
          content ratio of the product or adding artificial agents. The technology allows for better absorption of the
          active ingredients in the ointments, thereby ameliorating their cosmetic properties. Smids was developed
          at The University of Science and Technology (NTNU) in Trondheim, Norway

Patents have been awarded for the enzyme Zonase and while patent applications have been filed for the
technology Smids.

For more product information see section 5.5.

History and Development
The Company was established on April 10, 2004 in Sandefjord, Norway, as Biolink AS, and later changed name
to Kilda Biolink AS. In May 2007, the Company acquired all outstanding shares in Aqua Bio Technology AS,
established on April 14, 2000 in Bergen, Norway, by Professor Bernt Th. Walther (PhD). Subsequent to the
acquisition, the Company changed its name to Aqua Bio Technology AS, and the acquired company changed its
name to Kilda Biolink AS. Aqua Bio Technology and Kilda Biolink hereinafter jointly referred to as the “Aqua Bio
Group” or “the Group”. In September 2007 the Company was transformed into a public limited liability company
(ASA – “allmennaksjeselskap”) and was listed on Oslo Axess January 9, 2008. In fourth quarter 2008 the
Company sold its consumer skin care product line and thereto attached trademarks and rights to Zona Nordic AB.

The Board and Management of Aqua Bio Technology ASA run the Group at a strategic level as well as on a day
to day basis. There is no on-going activities in Kilda Biolink AS.

Objectives and Strategy
The Company’s overall strategy comprises three elements:
    • Market Zonase and Smids as ingredients and technology by entering long-term agreements with owners
       of well-established brands in the cosmetic industry
    • Produce further documentation of the physiological effects of Zonase and Smids – including relevant
       clinical documentation
    • Investigate and develop new applications of their current raw materials and technologies, in addition to
       searching for other, patentable technologies and substances with an international commercial potential




                                                          5
Following the Company’s decision to sell off the consumer product division, including the brands Zona and Kilda
Skindiver, its strategy and activities are concentrated around the development and promotion of the ingredients
and technology Zonase and Smids towards the international cosmetics and dermatological industry.

The strategic decision implied a substantial downscaling and restructuring of the organization, which will reflect
the Company’s aim to strengthen its sales and marketing efforts as well as develop and improve its patent
portfolio, technology and products. Other activities, such as production capabilities will be partly sub-contracted.

The goal is to become a notable, international supplier of ingredients and technology to the dermatological
industry and related markets, respected for innovative technology, as well as sound and competent dialogue with
customers.

Since the fall 2007 the Company has worked presenting and introducing the Company’s technology and
ingredients to major international participants in the cosmetics and dermatological market. During the last 12
months the Company participated at some of the major cosmetic industry trade fairs promoting the Zonase
technology and winning significant attention. This has resulted in a number of leads, The Company has entered
into non-disclosure agreements with several companies. However due to limited resources the Company has
concentrated on serving two major cosmetic companies located in the United States. These have received
technical information and product samples and are currently doing various tests of Zonase.

Board of Directors, Management, and Employees
Board of Directors
The Board consists of the following persons:
    •   Thor Arne Talseth, Chairman
    •   Bernt Theodor Walther
    •   Tone Bjørnov
    •   Anne-Sofie Utne
    •   Kjeld Rimberg

Management
Senior management is comprised of the following persons:
    • Arild Roar Rasmussen, CEO
    • Thor Arne Talseth, COO

The Company also employs Hans Kristian Leren as Production Manager.

Employees
As of the date of the Prospectus, the Company has 3 employees. For details on the Company’s administrative
bodies, management and employees, see section 7.

Share Capital
The Company’s share capital as of the date of this Prospectus is NOK 14,295,194.60, divided into 71,475,973
Shares of one class only and equal in all respects, each with a par value of NOK 0.20. The Company’s share
capital is fully paid up.

The Company is a public limited company organized under Norwegian law. All Shares of the Company are of the
same class and equal in all respects. Each Share carries the right to one vote in general meetings. The
Company’s Articles of Association do not provide for limitations on the transferability or ownership of Shares.

The Company’s share register is operated through the Norwegian Central Securities Depository (”VPS”). The
Company’s registrar is DnB NOR Bank ASA. The securities number (ISIN number) for the Company’s Shares is
NO0010307135.

Articles of Association
The objects and purposes of the Company are to develop and market dermatological, cosmetic and other health
care products by utilizing new technology and research results. This shall be enabled through own R&D and
through cooperation with domestic as well as international institutions. Reference is made to Appendix 1 to this
Prospectus.

Research and Development, Patents and Licenses
Aqua Bio Group secures its intellectual property through patents of selected IPR, and holds patents on Zonase for
Norway, USA, EU and other countries. Patent applications have been filed for the Smids technology.




                                                          6
1.2          The Private Placement
The purpose of the Private Placement was to facilitate further growth and development of the Company through
improvement of its working capital situation as well as reduction of the Company’s debt. The Placement was
target towards the Company’s creditors, a limited number of existing shareholders and certain investors to ensure
swift completion and the financial security of the Company.
The Company’s Creditors were offered to convert debt to equity through set-off of debt. In addition to
contributions in kind, shares were to be issued against cash.

The Company’s board set as a condition for the completion of the Private Placement that a satisfactory solution
was found with the Company’s creditors and that sufficient working capital was raised in the Private Placement.


1.2.1        Details of the Private Placement
Details of the resolved and completed Private Placement:

Size of the Offering:                              Minimum 30 000 000 and maximum 60 000 000 new shares
                                                   each with a par value of NOK 0.20
Subscription Price:                                NOK 0.20 per Share
Allocation:                                        April 16, 2009
Payment due:                                       April 23, 2009
Registration in the Register of Business           On or about May 7, 2009
Enterprises:
Delivery of New Shares to the Subscribers VPS      On or about May 8, 2009, at the latest May 15, 2009
accounts:
Admission to trading of the New Shares on Oslo     The New Shares are expected to be admitted for trading on
Axess:                                             or about May 8, 2009 after publication of this Prospectus


A total of 52,233,235 New Shares were issued in the Private Placement at a subscription price of NOK 0.20 per
share. Total gross proceeds from the Private Placement was NOK 10 446 647.

The total issued Share Capital of Aqua Bio Technology after the Private Placement increased to NOK 14 295
194.60, divided into 71 475 973 shares with a nominal value of NOK 0.20 per share.

The following table gives an overview of the transaction and costs:

                    (NOK)
                    Cash contributions                                             8 306 800

                    Contributions in kind                                          2 139 847

                    Gross proceeds                                                10 446 647

                    Repayment of debt                                              2 223 945

                    Transaction costs                                              1 366 084

                    Net cash proceeds from private placement                       4 716 771

Figure 1.1 Private Placement - transaction and costs

No expenses or taxes are charged to the subscriber in the Private Placement by the Company or the Manager.

For more information see section 4.




                                                        7
1.2.2        Settlement, VPS-registration, transferability and trading of the New Shares
             on Oslo Axess
Settlement of the New Shares in the Private Placement is made through registration of the New Shares in the
Register of Business Enterprises and distribution of the New Shares to the subscriber’s Norwegian Central
Securities Depository (VPS) account, which is expected to take place on or about May 7, 2009.

A Subscriber does not receive its shares until such Subscriber pays its shares in full and the share capital
increase is registered with the Norwegian Register of Business Enterprises (Foretaksregisteret). The New Shares
are issued at the time of registration with the Norwegian Register for Business Enterprises. A Subscriber may sell
or transfer its shares as soon as they are issued by registration with the Norwegian Register for Business
Enterprises. The New Shares may be sold or transferred on Oslo Axess upon the delivery of the New Shares to
the Subscriber’s VPS account.

The Company’s existing Shares currently trades on Oslo Axess under the symbol “ABT”.


1.2.3        Dilution
For the Company’s shareholders prior to the Private Placement, the dilution is 73 percent per share, provided that
they do not participate in the Private Placement.


1.3          Summary of Risk Factors
A number of risk factors may adversely affect the Company. Hereunder is an overview of the most relevant risk
factors described in section 2. However, the risks discussed in section 2 are not the only ones that may affect the
Company. Additional risks not presently known to the Company or that the Company currently considers
immaterial may also affect the value of the shareholders’ investments in the Company. Investors should make
their own risk assessments before making a decision to invest in the Shares.

Risk factors related to the Company and the industry:
      •   Macroeconomic Fluctuations
      •   Competitors
      •   Technological Changes
      •   Immature Company
      •   Key Personnel
      •   Partnerships
      •   Inaccurate estimates
      •   Patents and Licenses
      •   Currency Fluctuations
      •   External capital
      •   Trade barriers
      •   Political Events
      •   Government regulations
      •   Environmental factors

Risk factors relating to the Shares:
      •   Volatility of share price
      •   Exercise of Voting Rights for Nominee Shareholders
      •   Transfer restrictions
      •   Limitation of Ability to Make Claims against the Company
      •   The Ability to Bring an Action against the Company May Be Limited under Norwegian Law


1.4          Summary of Operating and Financial Information
Selected Financial Information
The summary of consolidated financial data set forth below may not contain all of the information that is important
to an investor when evaluating the Company’s financial performance and should be read together with section 9
and Appendices 2 to 4 of this Prospectus.




                                                         8
The consolidated annual financial information has been extracted from the Company’s annual consolidated
financial statements that have been audited by the Company’s independent auditors.

                                  2008            2007               2006
Figures in NOK
1,000                            IFRS             IFRS              IFRS
                              Audited          Audited           Audited
Revenue                          4 783            7 038             7 520
EBITDA                        (22 679)         (14 671)           (3 381)
EBIT                          (49 049)         (20 487)           (4 169)
Profit/(loss) for
                              (36 089)         (11 974)           (4 274)
period

Total assets                    75 454         112 475             18 836
Working capital                 32 450          35 773              4 504
Equity                          61 391          86 875              9 039
Debt                            14 062          25 600              9 798

Cash flow from:
Operating activities          (13 521)         (12 386)           (9 529)
Investment activities          (2 044)          (1 945)           (5 276)
Financial activities            14 345           17 260           12 554

Cash at end of
                                   147            1 367           (1 561)
period

Figure 1.2: Selected financial information

Summary of Capitalization and Indebtedness
The following table is a summary of the unaudited consolidated capitalization and indebtedness of the Company
as of December 31, 2008:

Figures in NOK 1,000                                                             December 31, 2008 (Unaudited)
Total current debt                                                                                      4 160
Total non-current debt                                                                                  9 903
Total indebtedness (A)                                                                                 14 062
Shareholders’ equity (B)                                                                               61 391
Total capitalization and indebtedness (A+B)                                                            75 454

Liquidity (C)                                                                                                  147
Current financial receivables (D)                                                                            3 370
Current financial debt (E)                                                                                   4 160
Net current financial indebtedness (C + D – E) (F)                                                           (643)

Non-current financial debt (G)                                                                                3 000
Net financial indebtedness (F-G)                                                                            (3 643)

Figure 1.3: Unaudited consolidated capitalization and net indebtedness based on the Company’s annual
consolidated financial statements for 2008

The table above should be read together with the Company’s unaudited interim condensed consolidated financial
statements and the related notes thereto, as well as the information under section 9 and Appendices 2 to 4.

Significant Changes and Trends since December 31, 2008
The company raised NOK 8 306 893 in cash in the private placement as described in Chapter 4,

In connection with the Private Placement the Company initiated debt negotiations with all creditor’s possessing
claims greater than NOK 10 000. The negotiations were successfully concluded and NOK 2 139 847 of debt was
converted to equity through set-off of debt in the private placement. Furthermore it resulted in the conversion of
MNOK 0.996 to non-interest bearing debt with two-year maturity and cash down payment of MNOK 2.224. This
includes termination of contract obligations. A total of MNOK 2.93 of long-term contract obligations has been
written-off, whereof 78 % connected to lease of premises.




                                                          9
The Company experiences significant international interest for its enzyme technology from potential customers.
This may be linked to the growing demand for new ingredients and technologies based on natural and marine
ingredients, while demand for traditional mammal derived ingredients declines.

The overall, long-term trend shows an increasing demand for cosmetic products all over the industrialized world.

Another important trend is linked to the increasing regulatory requirements for documentation of safety and
efficacy of cosmetic and derma-cosmetic ingredients and products.


1.5          Major Shareholders and Related Party Transactions
Major Shareholders
As of May 7, 2009 the Company had 193 registered shareholders, of whom 11 were non-Norwegian. The
Company’s 20 largest shareholders registered in the VPS are as set out in the table:

                                                                                                In percent of total
Name                                                                 Number of shares
                                                                                                     share capital
BOLAKS AS                                                                     3 624 750                   18.84 %
ZYM HOLDING AS                                                                2 543 468                   13.22 %
ADLER CAPITAL AS V/EINAR VANGSNES                                             1 747 757                    9.08 %
BLUEFIELD AS c/o Katalysator AS                                               1 121 725                    5.83 %
PECUNIA FORVALTNING                                                           1 000 000                    5.20 %
A-ZYM AS                                                                        930 000                    4.83 %
MOLVÆR IVAR ARVID                                                               801 665                    4.17 %
T-ZYM AS                                                                        736 250                    3.83 %
KATALYSATOR AS                                                                  480 362                    2.50 %
SVENSKA HANDELSBANKE C/O HANDELSBANKEN AS                                       474 000                    2.46 %
AQUAZYME TECHNOLOGY                                                             387 888                    2.02 %
MP PENSJON                                                                      330 000                    1.71 %
BARSKE GLEDER AS                                                                250 000                    1.30 %
TENVIK DIAGNOSTIKK O                                                            250 000                    1.30 %
TANNLEGE PER HAGEN A                                                            248 855                    1.29 %
PROTEOZYM TECHNOLOGY                                                            246 532                    1.28 %
GULLAS AS                                                                       241 000                    1.25 %
KROGSRUD INVEST AS Att.: Nils Krogsrud                                          175 000                    0.91 %
NORDEA BANK NORGE AS SECURITIES OPERATION                                       169 800                    0.88 %
OSLO OG FOLLO KJEVEO Espen Dahl                                                 166 200                    0.86 %

Others                                                                       3 317 486                    17.24 %
Total                                                                       19 242 738                   100.00 %

Figure 1.4: The 20 largest shareholders

Noticeable shareholdings
The following shareholders will own more than 5 percent of the issued share capital in the Company after the
Private Placement:

•     Bluefield AS is controlled by Kjetil Dahl and holds 6 371 725 shares in the Company, equaling 8.91 percent of
      the total share capital.
•     Pacific Andes International Holdings (BVI) Limited is controlled by Dennis Chan and holds 6 330 000 shares
      in the Company, equaling 8.86 percent of the total share capital.
•     Bolaks AS is controlled by the Holmefjord family and holds 4 832 330 shares in the Company, equaling 6.76
      percent of the total share capital. Bolaks is the supplier of fish larvae from which the Company’s main
      product, Zonase, is being manufactured.
•     Adler Capital AS is controlled by Einar Vangsnes and holds 4 585 257 shares in the Company, equaling 6.42
      percent of the total share capital.




                                                        10
•     Kjeld Rimberg holds 4 466 725 shares in the Company, equaling 6.25 percent of the total share capital
      through Kjeld Rimberg & Co AS and Kjeld Rimberg Consulting AS.
•     Thor Arne Talseth controls Ignite AS and owns 3 983 644 shares in the Company, equaling 5.57 % of the
      total share capital.
•     Pecunia Forvaltning AS is controlled by Peter Neslein and holds 3 714 000 shares in the Company, equaling
      5.20 percent of the total share capital.
All Shares and shareholders have equal rights, including voting rights. For more information see section 9.7.

Related party transactions
During the period covered by the historical financial information the Company has entered the following related
party transactions:

Year        Related Party                           Description of Transaction                                 Amount
                                                    Liquidity loan from Bluefield AS to Aqua
2006        Bluefield AS                                                                               NOK 1,250,000
                                                    Bio Technology ASA (no longer in force)
                                                    Subordinated loan from Myrvollveien 3B              NOK 650,000
2006        Myrvollveien 3B AS                      AS to Aqua Bio Technology ASA (no                 +5% interest per
                                                    longer in force)                                           annum
                                                    Subordinated loan from Jarl Kjelstadli to           NOK 150,000
2006        Jarl Kjelstadli                         Aqua Bio Technology ASA (no longer in             +5% interest per
                                                    force)                                                     annum
                                                    Part-time consultancy with Aqua Bio               NOK 50,000 per
2007        Kjell H. Bakke, previous chairman
                                                    Technology ASA (no longer in force)                         month
                                                    Share purchase and sale agreement with
2007        AS Bolaks and Zym Holding AS            Kilda Biolink AS regarding 100% of the                      NOK 1
                                                    shares in Aquazym Technology AS
                                                    Exclusive, royalty-free license to use Kilda
                                                    Biolink’s Zonase patents on all fields
2007        Aquazym Technology AS                                                                                      -
                                                    except cosmetics and dermatological
                                                    applications
2008-       Kjeld Rimberg Consulting AS,            Part-time consultancy with Aqua Bio
                                                                                                         NOK 540,345
2009        (Kjeld Rimberg, Chairman)               Technology ASA and liquidity loan
2008-       Bluefield AS (Kjetil Dahl, previous     Part-time consultancy with Aqua Bio
                                                                                                         NOK 323,000
2009        board member)                           Technology ASA and liquidity loan
2008-       Valutacorp AS, (Tone Bjørnov,           Part-time consultancy with Aqua Bio
                                                                                                          NOK 62,500
2009        board member)                           Technology ASA
2008-       Kauna Management AS, (Anne              Part-time consultancy with Aqua Bio
                                                                                                          NOK 71,500
2009        Sofie Utne, board member)               Technology ASA
            AS Bolaks                               Supplier of raw material                                           -

Figure 1.5: Related party transactions

Option Agreements
Except for the share option agreement with the Chairman Thor Arne Talseth (described in section 7.3), no option
agreements exist with related parties.

All the transactions have been carried out as part of the ordinary operations and at an arm’s length basis.

For more information on related party transactions see section 9.9.


1.6          Patents, Licenses and IPR
Aqua Bio Group secures its intellectual property through patents of selected IPR. The company seeks to build a
patent portfolio to secure the critical basis of its technology, fabrication processes, and possible applications in the
cosmetic and dermatological fields. It is the policy of the Company to constantly evaluate and pursue patenting
opportunities of its R&D activities. UK, US and PCT patent applications for the Smids technology have been filed.

Scope of IPR
The Company has granted Aquazym Technology AS a license to utilize Zonase outside of the dermatological and
cosmetic areas on an exclusive basis. No such applications have as yet been identified.




                                                          11
Other
In addition to patents, the Company maintains important and proprietary know-how and technologies related to
materials, production processes, quality control and other aspects of its business that are held as trade secrets.
Some of this know-how is central to the cost-efficient manufacturing of Zonase. This knowledge in combination
with patents is an important factor in protecting the Company’s existing and future businesses.

For detailed information please refer to section 5.6.


1.7          Advisors and Auditors
Manager
VentureLab AS has acted as the Company’s Manager in connection with the Private Placement.

VentureLab AS
Haakon VIIs gate 9
0161 Oslo

Advisors
Advokatfirmaet Selmer DA has acted as the Company’s Advisor in connection with the Private Placement.

Advokatfirmaet Selmer DA
Postboks 1324 Vika
0112 Oslo

Auditor
The Company’s auditor is Ernst & Young AS, state authorized public accountant, who has acted as the
Company’s auditor since inception.

Ernst & Young AS
Oslo Atrium
Postboks 20
0051 Oslo


1.8          Documents on display
For the life of this Prospectus, the following documents may be inspected as indicated below:

      •   Memorandum of Association
      •   Articles of Association for Aqua Bio Technology ASA
      •   Aqua Bio Technology’s Annual Report for 2008 (IFRS) with Auditor’s Report
      •   Aqua Bio Technology’s Annual Report for 2007 (IFRS) with Auditor’s Report
      •   Aqua Bio Technology’s Annual Report for 2006 (IFRS) with Auditor’s report
      •   Kilda Biolink’s (former Aqua Bio Technology AS) Annual Report for 2006 (NGAAP) with Auditor’s Report

The documents will be available for inspection for the life of the Prospectus in the Company’s offices (see below)
and the Manager’s offices (see address above), respectively, during normal business hours.




                                                        12
2             RISK FACTORS
The following risk factors are particularly important for any evaluation of the risk profile of the Company. The
factors discussed in the following section are considered to represent the most important risk factors affecting the
Company’s earnings and value. However, the risks discussed below are not the only ones that may affect the
Company. Additional risks not presently known to the Company or that the Company currently considers
immaterial may also affect the value of the shareholders’ investments in the Company.


2.1           Market Risk
Macroeconomic Fluctuations
Lower economic growth or a downturn in the Company’s main markets could have a negative effect on the
Company’s business and profitability.

The Company has limited control over market prices, which can be affected by numerous factors including
international economic and political trends, inflation, currency exchange fluctuations, interest rates, global or
regional consumption patterns, speculative activities and increased or decreased production due to competition.
The effect of these factors on the price of the Company’s products and technologies, and therefore the future
economic viability of the Company, cannot be accurately predicted.

Competitors
The cosmetic industry is highly competitive in all phases and the Company will be competing with many
established companies, which may have competitive advantages.

Technological Changes
Rapid technological changes or altered customer needs may deteriorate the Company’s competitiveness.

Immature Company
Aqua Bio Technology is a relatively young company, with new products in a highly competitive market. Therefore,
investing in the Company involves inherent risks.


2.2           Operational Risks
Insurance against Risk
The Company may not be able to insure against all risks on commercially viable terms, and there will always be a
risk that certain events may occur for which only partial or no indemnity is payable according to the Company's
insurance.

Contractual
During periods where the Company’s revenues originates from a limited amount of parties, a dependency towards
these parties will be established where a breach of contractual obligations, reduced demand, and similar events
on the part of the contractual counterpart may have a substantial impact on the performance of the Company.
Such events are sought mitigated through agreements giving an exclusivity or preference to contractual parties
against minimum purchases or certain payment terms. Furthermore, the Company will seek to increase the
number of parties to decrease its dependency.

Key Personnel
The loss of any of the members of its senior management or other key personnel or the inability to attract a
sufficient number of qualified employees could adversely affect its business and results of operations.

Scalability
Scalability and the ability to handle organic growth may have a negative impact on the Company’s future
performance.

Partnerships
Partners may choose to discontinue their collaboration with the Company.

Inaccurate Estimates
There can be uncertainty factors in estimating the value of raw materials. In order to evaluate the stock, the
activity level of the enzymes must be evaluated. The evaluation may later prove to be inaccurate, and the stock
may therefore be adjusted downward or upward.




                                                         13
Patents and Licenses
The success, competitive position and future revenues will depend in part on the Company’s ability, and the ability
of its licensors and partners, to obtain and maintain patent protection for its products, methods, processes and
other technologies, to preserve trade secrets, to prevent third parties from infringing on proprietary rights and to
operate without infringing the proprietary rights of third parties. To date, the Company holds and has applied for
certain exclusive patent rights in major markets and predicts to file additional applications. However, the
Company cannot predict:
      • The degree and range of protection any patents will afford against competitors and competing
           technologies, including whether third parties will find ways to invalidate or otherwise circumvent the
           patents.
      •   If and when additional patents will be issued.
      •   Whether or not others will obtain patents claiming aspects similar to those covered by the Company’s
          patents and patents applications.
      •   Whether the Company will need to initiate litigation or administrative proceedings, or whether such
          litigation or proceedings are initiated by third parties against the Company, which may be costly,
          regardless of if the Company wins or loses.
      •   Whether third parties will claim that the Company’s technology infringes upon their rights.


2.3          Financial Risk Factors
Currency Fluctuations
A proportion of the Company’s operating revenues and expenses are exposed to fluctuations in various foreign
currencies. Potential customer agreements can also be in foreign currency. Consequently, foreign exchange rate
fluctuations may impact the Company’s revenues for the life of these agreements, which may be as long as 10 to
20 years. Going forward, the Company may use financial currency hedging instruments to reduce this risk.

External Capital
A lack of access to external capital or material changes in the terms and conditions relating to the same could
limit the Company’s future growth and strategy and have an impact on the Company’s finance costs.


2.4          Other Risks
Trade barriers
Monetary trade barriers and other non-monetary barriers could have a material adverse effect on the Company’s
business, results of operations and financial condition.

Political Events
Political events could change the business climate and regulation in a way that has a negative impact on the
value of the Company’s operations.

Government Regulations
The operations of the Company will, from time to time, require permits from governmental authorities and will be
governed by laws and regulations regarding potential infringement of health and pharmaceutical regulation,
taxation, employment standards, occupational health, environmental protection and other matters. The Company
may in the future need to apply for permits from different authorities, which may be denied by the Government.
Companies engaged in the life science and cosmetic industries can experience increased costs as a result of the
need to comply with applicable laws, regulations and permits as they change in the future.

Environmental Factors
Natural services based companies are subject to environmental regulations in the jurisdictions in which it
operates. Environmental legislation may evolve in a manner, which in the future may require stricter regulations,
increased fines and penalties for non-compliance, more stringent environmental assessments of proposed
projects and a heightened degree of responsibility for companies and their officers, directors, and employees.
There are no assurances that future changes in environmental regulations, if any, will not adversely affect the
Company’s operations and activities. Compliance with respect to environmental regulations, closure and other
matters may involve significant costs and/or other liabilities. Non-Governmental Organizations may also from
time to time criticize the Company's operations and development plans.




                                                           14
2.5         Risks Related to the Shares
Volatility of the Share Price
The price of the Company’s Shares may experience substantial volatility. The trading price of the Shares could
fluctuate significantly in response to variations in operating results, adverse business developments, interest rate
changes, changes in financial estimates by securities analysts, matters announced in respect of major customers
or competitors or changes to the regulatory environment in which the Company operates.

Market conditions may affect the Shares regardless of the Company’s operating performance or the overall
performance of the life science and cosmetic industries. Accordingly, the market price of the Shares may not
reflect the underlying value of the Company’s net assets, and the price at which investors may dispose of their
Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the
Company while others of which may be outside the Company’s control.

The market price of the Shares could decline due to sale of a large number of shares in the market or the
perception that such sales could occur. Such sales could also make it more difficult for the Company to offer
equity securities in the future at a time and at a price that are deemed appropriate.

Exercise of Voting Rights for Nominee Shareholders
Beneficial owners of the Shares that are registered in a nominee account (e.g. through brokers, dealers or other
third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with
the Norwegian Central Securities Depository (VPS) prior to the Company’s general meetings. The Company
cannot guarantee that beneficial owners of the Shares will receive the notice for a general meeting in time to
instruct their nominees to either effect a re-registration of their Shares or otherwise vote for their Shares in the
manner desired by such beneficial owners.

Transfer Restrictions
The Company has not registered the Shares under the US Securities Act of 1933 or the securities laws of other
jurisdictions than Norway and the Company does not expect to do so in the future. In addition, there can be no
assurances that shareholders residing or domiciled in the United States will be able to participate in future capital
increases or subscription rights.

Limitation of Ability to Make Claims against the Company
The ability of subscribers of Shares in the Company to make claims against the Company is severely limited
under Norwegian law once the capital increase has been registered in the Norwegian Register of Companies. It
may be difficult for investors based in the United States to enforce civil liabilities predicated on U.S. securities
laws against the Company, the Company’s Norwegian affiliates or the Company’s directors and executive
officers.

The Ability to Bring an Action against the Company May Be Limited under Norwegian Law
The Company is a public limited liability company incorporated under the laws of Norway. The rights of holders of
Shares are governed by Norwegian law and by the Articles of Association. These rights differ from the rights of
shareholders in other jurisdictions, e.g. typical U.S. corporations. In particular, Norwegian law limits the
circumstances under which shareholders of Norwegian companies may bring derivative actions. Under
Norwegian law, any action brought by the Company in respect of wrongful acts committed against the Company
takes priority over actions brought by shareholders in respect of such acts. In addition, it may be difficult to
prevail in a claim against the Company under, or to enforce liabilities predicated upon, U.S. securities laws.




                                                         15
3           RESPONSIBILITY STATEMENTS
3.1         The Board of Directors
The board of directors of Aqua Bio Technology ASA accepts responsibility for the information given in the
Prospectus dated May 7, 2009. The board of directors hereby declares that, to the best of our knowledge, having
taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in
accordance with the facts and contains no omission likely to affect its import.



                                              Bergen, May 7, 2009

                              The Board of Directors of Aqua Bio Technology ASA




              Thor Arne Talseth, Chairman                    Bernt T. Walther         Tone Bjørnov




                                Anne Sofie Utne                      Kjeld Rimberg


3.2         Statement by the Manager
VentureLab AS acts as Manager to Aqua Bio Technology ASA in connection with the listing of the New Shares in
the Private Placement.

The Prospectus has been prepared by the Board of Directors and management of the Company in co-operation
with the Manager. The Manager does not, however, make any representation, warranty or undertaking, express
or implied, and accepts no responsibility or liability as to the accuracy or the completeness of the information
contained in this Prospectus or any other information supplied in connection with the Listing of the New Shares in
the Private Placement.


                                                Oslo, May 7, 2009

                                                  VentureLab AS



3.3         Forward Looking Statements
This Prospectus includes “forward-looking” statements, including, without limitation, projections and expectations
regarding the Company’s future financial position, business strategy, plans and objectives. When used in this
document, the words “anticipate”, “believe”, “estimate”, “expect” and similar expressions, as they relate to the
Company, its subsidiaries or its management, are intended to identify forward-looking statements. Such forward-
looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company, or, as the case may be, the industry, to materially differ
from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding the Company’s present and
future business strategies and the environment in which the Company will operate. Factors that could cause the
Company’s actual results, performance or achievements to materially differ from those in the forward-looking
statements include but are not limited to, the competitive nature of the markets, in which the Company operates,
technological developments, government regulations, changes in economical conditions or political events.
These forward-looking statements reflect only the Company’s views and assessment as of the date of this
Prospectus.




                                                        16
4            DETAILS OF THE PRIVATE PLACEMENT
4.1          Purpose of the Private Placement
The purpose of the Private Placement was to facilitate further growth and development of the Company through
improvement of its working capital situation as well as reduction of the Company’s debt. The Placement was
target towards certain creditors, a limited number of existing shareholders and certain investors to ensure swift
completion and the financial security of the Company.
Creditors in the Company were offered to convert debt to equity through set-off of debt. In addition to
contributions in kind, shares were to be issued against cash.

The Company’s board set as a condition for the completion of the Private Placement that a satisfactory solution
was found with the Company’s creditors and that sufficient working capital was raised in the Private Placement.


4.2          Resolution
On April 16, 2009 the Extraordinary General Meeting resolved to increase the Company’s Share Capital through
the issuance of New Shares.

The following resolution was passed by the Extraordinary General Meeting:

”The company’s share capital is increased on the following terms:
    1. The share capital is increased by NOK 10,446,647 by issuing 52,233,235 new shares, each share with a
        nominal value of NOK 0.20.
    2. The subscription price shall be NOK 0.20 per share. Payment of shares can be made through
        contribution in cash or in kind though set-off of debt.
    3. The new shares are subscribed by the Company’s creditors, a limited number of existing shareholders
        and certain investors, as displayed in attachment 2 to the protocol.
    4. The existing shareholders’ preferential right to subscribe shares according to the Public Limited Liabilities
        Act § 10-4 is waived.
    5. The subscription of the shares takes place in the protocol of the Extraordinary General Meeting of April
        16, 2009.
    6. Subscription for shares with set-off against debt is done by issuance of new shares at a subscription
        value equal to the set-off debt, according to the Public Limited Liabilities Act § 10-2, and is deemed
        settled at the signing of the Extraordinary General Meeting protocol.
        Subscriptions against contribution in cash shall be settled by payment to the Company’s account by 30.
        April 2009.
    7. The new shares will carry right to dividend with effect from the date of registration in the Register of
        Business Enterprises.
    8. The new shares shall carry the same rights as the other shares in the Company.
    9. Section 4 of the Company’s articles of association will at the completion of the share capital increase be
        given the following wording:
        “The company’s share capital is NOK 14,295,194.60 divided on 71,475,973 shares, each with a nominal
        value of NOK 0.20.””

The Extraordinary General Meeting’s resolution together with the result of the Private Placement was announced
April 16, 2009 through Oslo Stock Exchange’s information system.


4.3          The Private Placement
Details of the resolved and completed Private Placement:

Size of the Offering:                               Minimum 30 000 000 and maximum 60 000 000 new shares
                                                    each with a par value of NOK 0.20
Subscription Price:                                 NOK 0.20 per Share
Allocation:                                         April 16, 2009
Payment due:                                        April 23, 2009
Registration in the Register of Business            On or about May 7, 2009
Enterprises:
Delivery of New Shares to the Subscribers VPS       On or about May 8, 2009, at the latest May 15, 2009
accounts:
Admission to trading of the New Shares on Oslo      The New Shares are expected to be admitted for trading on
Axess:                                              or about May 8, 2009 after publication of this Prospectus




                                                        17
A total of 52,233,235 New Shares were issued in the Private Placement at a subscription price of NOK 0.20 per
share with total proceeds of NOK 10,446,647.

Participants in the Private Placements could subscribe for New Shares through cash payment or contribution in
kind. Of the total gross proceeds NOK 8,306,800 was in cash and NOK 2,139,847 was contribution in kind
through conversion of debt to equity.

The following table gives an overview of transaction and costs:

                    (NOK)
                    Cash contributions                                             8 306 800

                    Contributions in kind                                          2 139 847

                    Gross proceeds                                                10 446 647

                    Repayment of debt                                              2 223 945

                    Estimated transaction costs (inc. VAT)                         1 366 084

                    Net cash proceeds from private placement                       4 716 771

Figure 4.1 Private Placement - transaction and costs

No expenses or taxes were charged to the subscriber in the Private Placement by the Company or the Manager.

Subscriptions by major shareholders and related parties
Hereunder follows an overview of subscriptions done by major shareholders, members of the Company’s
management, supervisory and administrative bodies and subscriptions larger than five percent of the private
placement.


                                                                      Shares    Total Shares    Percent of total
Subscriber                               Position
                                                                  subscribed                     Share Capital
Thor Arne Talseth - Ignite AS            Chairman / COO             2 750 000      3 983 644            5.57 %
Kjeld Rimberg – Kjeld Rimberg
                                         Board Member              4 451 725       4 466 725             6.25 %
Consulting AS / Kjeld Rimberg AS
Tone Bjørnov – Valutacorp AS             Board Member                312 500        312 500              0.44 %
Anne-Sofie Utne – Kauna
                                         Board Member                285 000        285 000              0.40 %
Management AS
                                         Previous Board
Kjetil Dahl – Bluefield AS               member, major             5 250 000       6 371 725             8.91 %
                                         shareholder
Dennis Chan – Pacific Andes              Major
                                                                   6 330 000       6 330 000             8.86 %
International Holding (BVI) Limited      shareholder
                                         Major
Petter Neslein – Pecunia AS                                        2 714 000       3 714 000             5.20 %
                                         shareholder
                                         Major
Roger Hofseth – Roger Hofseth AS                                   3 500 000       3 500 000             4.90 %
                                         shareholder


4.4          Share capital before and after the Private Placement
The Company’s Share Capital prior to the Private Placement was NOK 3,848,547.60 divided into 19,242,738
Shares, each with a par value of NOK 0.20.

Following the Private Placement, the Share Capital of Aqua Bio Technology AS is NOK 14,295,194.60 divided
into 71,475,973 Shares, each with a par value of NOK 0.20.




                                                       18
4.5          Settlement, VPS-registration, transferability and trading of the New Shares
             on Oslo Axess
Settlement of the New Shares in the Private Placement is made through registration of the New Shares in the
Register of Business Enterprises, expected to take place on or about May 7, 2009, and distribution of the New
Shares to the subscriber’s Norwegian Central Securities Depository (VPS) account, which is expected to take
place on or about May 8, 2009, and at the latest May 15, 2009.

A Subscriber does not receive its shares until such Subscriber pays its shares in full and the share capital
increase is registered with the Norwegian Register of Business Enterprises (Foretaksregisteret). The New Shares
are issued at the time of registration with the Norwegian Register for Business Enterprises. A Subscriber may sell
or transfer its shares as soon as they are issued by registration with the Norwegian Register for Business
Enterprises. The New Shares may be sold or transferred on Oslo Axess upon the delivery of the New Shares to
the Subscriber’s VPS account.

The Company’s existing Shares currently trades on Oslo Axess under the symbol “ABT”.


4.6          Rights conferred by the new shares
The New Shares will in all respects carry full shareholder rights equal to the existing Shares of the Company once
the New Shares have been issued and registered at the Norwegian Register of Business Enterprises. The New
Shares carry right to dividends, if any, which is resolved distributed after the share capital increase is registered in
the Norwegian Register of Business Enterprises in line with all other shares of the Company. Each New Share will
confer the right to one vote at general meetings. All shares also carry an equal right to any surplus in the event of
a liquidation of the Company.

There are mandatory offer requirements pursuant to the Norwegian Securities Trading Act, requiring among other
a shareholder to give a mandatory offer if the shareholder acquires more than 1/3 of the voting rights of a
Norwegian company listed on Oslo Axess or Oslo Stock Exchange. Further, the Public Limited Companies Act
allows an owner to squeeze out a minority of less than 10 percent under certain circumstances.

For a description of rights attaching to Shares in the Company, see section 9 "Shares and Share Capital” and
section 10 “Shareholder Matters" of this Prospectus.


4.7          Dilution
For the Company’s shareholders prior to the Private Placement, the dilution is 73 percent per share, provided that
they do not participate in the Private Placement.


4.8          Share registrar and securities number
The Company’s Shares are registered on name in the Norwegian Central Securities Depository (VPS). The
Shares’ securities ISIN number is NO0010307135. The Company’s registrar is DnB NOR Bank ASA, Stranden
21, Aker Brygge, N-0021 Oslo, Norway.


4.9          Legislation
The Shares have been created under the Norwegian Public Limited Companies Act.


4.10         Manager
The Manager of the Private Placement is VentureLab AS.

VentureLab AS
Haakon VIIs gt 9
0161 Oslo
Norway

Telephone:         +47 21 01 85 30
Fax:               +47 21 01 85 31




                                                          19
5           COMPANY INFORMATION
If not otherwise indicated in the text, the source of the information in this section is Aqua Bio Technology.
Information that has been sourced from a third party has been accurately reproduced. As far as the Company is
able to ascertain from information published by that third party, no facts have been omitted which would render
the reproduced information inaccurate or misleading.


5.1         General
Aqua Bio Technology ASA was incorporated and registered with the Norwegian Register of Business Enterprises
on March 9, 2004 under the name of Kilda Biolink AS as a Norwegian private limited liability company with
registration number 886 582 412 and operates under Norwegian Law. On October 22, 2007 the Company was
transformed into a public limited liability company, “ASA”, as a result of a resolution at the Extraordinary General
Meeting held on September 25, 2007. The Company’s principal place of business is:

       Aqua Bio Technology ASA
       C Sundts gate 51
       N-5004 Bergen

       Telephone:     +47 55 55 07 73
       Fax:           +47 55 32 80 16
       Website www.aquabiotechnology.com

The Company is an independent developer, manufacturer and seller of patented ingredients and technology to
the cosmetic industry. The Company’s activities are related to the patented enzyme Zonase and the technology
Smids.


5.2         Corporate Structure
In May 2007, the Company (under its former name Kilda Biolink AS) acquired 100 percent of the shares in Aqua
Bio Technology AS, company no. 981 954 548, incorporated on 10 April 2000, and the two companies thereafter
exchanged company names. (Aqua Bio Technology and Kilda Biolink hereinafter jointly referred to as the “Aqua
Bio Group” or “the Group”).


                                      AQUA BIO TECHNOLOGY ASA


                                          100 %

                                              KILDA BIOLINK AS


Figure 5.1 Corporate Structure

The Board and Management of Aqua Bio Technology ASA run the Group at a strategic level as well as on a day
to day basis. There is no on-going activities in Kilda Biolink AS.


5.3         History and Development
The Company has its roots in the aquaculture industry and has throughout many years in close collaboration with
research environments discovered and developed an enzyme and a technology, which is in demand in the
cosmetic industry. Kilda Biolink AS in Bergen (formerly Aqua Bio Technology AS) which main activity has been
research and development in connection with this enzyme called Zonase has sold its products to Aqua Bio
Technology AS (formerly Kilda Biolink AS) in Sandefjord on an exclusive basis. Aqua Bio Technology AS has
been developing and marketing cosmetic products based on this enzyme and has furthermore developed a
technology called Smids, which also has its application in the cosmetic industry.

By bringing the two companies together in the summer of 2007, the Aqua Bio Group had enabled itself to fully
commercialize Zonase and Smids through the Group’s own brands as well as through license agreements with
owners of large global brands in the cosmetic industry.




                                                         20
In the fall of 2008, the Company made a strategic decision to put its resources into the ingredient Zonase and the
Smids technology. As a consequence all rights and obligations related to the Company’s consumer brands were
disposed.


An overview of Aqua Bio Group’s history is given below:

YEAR                      MILESTONES

2000                      Kilda Biolink AS is founded
2003                      Kilda Biolink AS is granted the first patent for Zonase
2004                      Aqua Bio Technology AS (the Company) is founded
                          The Company starts selling its first products Zona Extra Skin Repair and Zona Daily
2005                      Skin on the Norwegian market
2006                      The Company applies for the first patent for Smids
                          Kilda Biolink acquires 100 percent of the shares in Aqua Bio Technology AS. Payment
2007                      against shares in Kilda Biolink AS. The two companies exchange names.
                          Aqua Bio Technology is transformed into a public limited liability company, “ASA”.
2008                      Aqua Bio Technology sells its consumer product division to Zona Nordic AB

Figure 5.2: History and development


5.4         Vision and Strategy
Aqua Bio Group’s vision is to build value for its shareholder by offering high value ingredients and technologies to
the global cosmetic industry.

The Company’s overall strategy comprises three elements:
    • Market Zonase and Smids as ingredients and technology by entering long-term agreements with owners
       of well-established brands in the cosmetic industry
    • Produce further documentation of the physiological effects of Zonase and Smids – including relevant
       clinical documentation
    • Investigate and develop new applications of their current raw materials and technologies, in addition to
       searching for other, patentable technologies and substances with an international commercial potential

Following the Company’s decision to sell off the consumer product division, including the brands Zona and Kilda
Skindiver, its strategy and activities are concentrated around the development and promotion of the ingredients
and technology Zonase and Smids towards the international cosmetics and dermatological industry.

The strategic decision implied a substantial downscaling and restructuring of the organization, which will reflect
the Company’s aim to strengthen its sales and marketing efforts as well as develop and improve its patent
portfolio, technology and products. Other activities, such as production capabilities will be partly sub-contracted.

The goal is to become a notable, international supplier of ingredients and technology to the dermatological
industry and related markets, respected for innovative technology, as well as sound and competent dialogue with
customers.

Since the fall 2007 the Company has worked presenting and introducing the Company’s technology and
ingredients to major international participants in the cosmetics and dermatological market. During the last 12
months the Company participated at some of the major cosmetic industry trade fairs promoting the Zonase
technology and winning significant attention. This has resulted in a number of leads, The Company has entered
into non-disclosure agreements with several companies. However due to limited resources the Company has
concentrated on serving two major cosmetic companies located in the United States. These have received
technical information and product samples and are currently doing various tests of Zonase.




                                                         21
5.5          The Products and the Technology

5.5.1        Zonase
The effects of Zonase on human skin were discovered by coincidence. Salmon hatchery workers reported that the
skin on their hands became soft and felt smooth when they exposed them to the ice-cold hatching fluid from
salmon. This was unexpected as swollen, red and chapped skin is the normal status of hands after prolonged
exposure to cold water.

Scientists wanted to find the explanation for the smooth skin. Research came up with Zonase. Zonase is an
Enzyme, which enables the fish embryo break out of its eggshell. The eggshells are made as a tough, fibrous
protein structure, and the fish larva is not able to get out by using mechanical power. Zonase helps to digest the
eggshell without harming the larva, and thereby allowing the fish to be born.

This natural and elegant process combining “rough” digestion of the dead tissue in the eggshell with preservation
of the living larvae is also the key to the skin treatment properties of Zonase.

In order for skin to regenerate, the dead outer layer of skin needs to be removed. This principle of stimulating new
skin renewal has been utilized in skin care regimes for centuries. However, this has often been done with either
harsh mechanical processes or chemical ingredients, which also harm the skin. Zonase accelerates the normal
detachment of dead and flattened keratinocytes from the outer surface of human skin. This process known as
exfoliations, speeds up the natural occurring skin renewal process, resulting in a rejuvenated, smooth and healthy
skin.

Zonase’s properties allow it only to digest the links between the dead skin cells, leaving the living cells untouched.
The effect from Zonase is therefore highly selective, very gentle and efficient.

Zonase is an exceptional stable protein with a shelf life in products measured in years.

Zonase is approved by European (DK, NO) health regulatory authorities for use in cosmetics, and has been used
in the skincare brands Zona and Kilda Skindiver in the Scandinavian market for several years. Zona is a mild
exfoliation enhancing cream containing Zonase addressing a wide array of skin problems. Kilda Skindiver is a
rejuvenating cream aimed at the beauty segment. In 2007 Zona was voted the best skin care product in Finland,
and Kilda Skindiver was voted best beauty product by the Swedish magazine Femina.

Zonase – in depth
Zonase is a non-toxic, stable active enzyme isolated from hatching salmon larvae with the property to disintegrate
dead skin cells without harming living cells. Thus, Zonase is a highly suitable as an active ingredient for use in
skin-care products and other cosmetics.

Enzymes are catalysts essential in most features of life. Proteases comprise a subclass of enzymes with the
ability to cleave proteins into smaller parts.

The enzyme Zonase is secreted by salmon larvae at the time of hatching. Since the major protein constituents of
the eggshell is hardened during fertilization, it is impossible for the salmon larvae to break out of the eggshell by
sheer and simple mechanical force. The biological significance of Zonase is thus to soften and degrade the
eggshell to such an extent that the embryo can break out of it. It is of course of utmost importance that the
enzyme (Zonase) possesses a substrate specificity to ensure sufficient degradation of the eggshell without
hurting or damaging the salmon larvae. Hence, Zonase is the only known non-cytotoxic protease, a unique
feature only known to be possessed by Zonase.

When tested in vitro on keratin, Zonase is demonstrated to have a mild
keratolytic activity. When tested on human keratinocytes in culture, Zonase,
contrary to all other tested proteases, is demonstrated not to kill living cells.
Applied on live human skin models, Zonase is demonstrated to loosen up
the cell junctions between the dead cells in the top layer, leaving the living
cells untouched. Zonase is the only enzyme described pt. that can enhance
a gentle peeling (exfoliation) of the human skin, leaving the living tissue
untouched. Removal of dead skin cells is known to stimulate regeneration
of new skin cells, while opening up the cell junctions between dead skin
cells will enhance the transportation of humidity and active ingredients into
the deeper layers of the skin.

It is reason to stress that enzymatic removal of dead skin cells is not
considered being a medical use of a protease.




                                                           22
Apparently, hydrophobic amino acid residues direct Zonase attachment prior to catalysis. Zonase has a turnover
number for catalysis comparable to other serine proteases when tested with small synthetic substrates. Most
importantly, Zonase is not a substrate for its own proteolysis. Hence, the enzyme is extraordinarily stable in
aqueous solutions or as dry powder even in the absence of stabilizing agents.

Catalytic efficiency of the enzyme compares favorably to that of trypsin for identical substrates, but the catalytic
specificity of cleavage is different, being sequence-specific (plasmin-like) rather than trypsin-like. The products of
catalysis are therefore primarily polypeptides rather than oligopeptides. Zonase is unperturbed by proteolytic
inhibitors of the non-serine protease types.

When Zonase is assayed against synthetic peptide substrate, the enzyme demonstrates to have a broad activity
profile from mildly acidic pH to extremely alkaline pH. Enzymatic activity is not dependent on ions, and is
essentially independent of ionic strength (from distilled water to multi-molar salts). The enzyme is unperturbed by
chelators, and by at least intermediate strengths of chaotrops and most detergents. The optimal temperature for
catalysis with most synthetic substrates is around 50° C, with significant activity near freezing temperatures, as
well as at much higher temperatures. The activity may be partially recovered after boiling for 15 minutes.

The stability of Zonase is unusual. Zonase in sterile aqueous solutions (kept and tested at ambient temperatures)
showed minimal loss of activity from March 2003 until March 2006. This property of non-self-destruction indicates
that Zonase is exceptionally easy to handle during industrial or scientific use.

Zonase tolerates high concentrations of organic solvents, being extremely resistant to denaturation by many
organic solvents. Zonase may therefore be useful for non-conventional purposes, for instance when cleaning in
hydrophobic environments is needed. The extreme stability towards exposure to strong acids or very strong
alkalinity points to other novel uses of Zonase.

Zonase has high affinity for hydrophobic substrates and thus performs hydrolysis on targets that are normally not
affected by proteases. Zonase releases large polypeptide products rather than small peptides from its targets.

Zonase catalytic specificity is further substantiated by the finding that Zonase shows no toxic effects on living
human cells in culture, even in serum-free media and upon prolonged exposure to very high enzyme
concentrations. In clinical tests on human skin, no allergic reactions were found.


5.5.2       Smids
Smids is a technology developed at The Norwegian University of Science and Technology (NTNU) in Trondheim,
allowing customizing the melting point of ointments without altering the water content ratio of the product or
adding artificial agents. Achieving an ideal melting point allows for the active ingredients in the ointments to be
better absorbed by the skin.

Creams are generally stabilized mechanical blends of lipids and water. The purpose of some creams is to make
a protective film to prevent further cracking of dry and chapped hands, while others are meant to penetrate the
upper layers of the skin so that the active ingredients can execute their biological effects there. The consistence
of creams is normally regulated by manipulating the composition of the lipid phase. In other words the choice of
lipids dictates how a cream tends to behave on human skin.

By applying new technology Smids, it is possible to tailor the physical performance of cream products in a way so
that they feel nice and easy to apply on the skin. This can be achieved without altering the water content - or the
addition of neither artificial or toxic tencides, nor
surfactants.

Polymers are long chained molecules made up
from repetitive units of smaller similar molecules.
Such molecules may be isolated from living
organisms where they mostly (but not always)
have had a structural function, i.e. organic
tissues providing support and mechanical
strength. A few examples on such compounds
are cellulose (cell wall in trees), collagen
(connective tissue from mammals) alginate (cell
wall in kelp and seaweed), carrageenan (cell wall
in red algae) etc. Polymers originating from
living organisms are termed biopolymers, which
is different from manmade synthetic polymers
such as PVC and polypropylene.




                                                         23
Addition of alginate isolated from kelp is a common and frequently used principle to regulate consistence in food,
cosmetic and medical products. Alginate is a polymer with more than 1000 industrial applications as binder in
welding electrodes, food, ointments and creams.

Collagen is normally isolated from mammalian tissue using heat. The connective tissue subjected to heat
treatment can when cooled form transparent more or less rigid gels, normally referred to as gelatin. Gelatin is
amongst other things used to make capsules for dietary supplement and medicines. It is a well-known fact that
some religions have strict rules against intake of food that contains or might be contaminated with porcine
material, and gelatin from these sources may create a problem.

In order to develop the market for fish gelatin, professor Olav Smidsrød and his group at the Norwegian University
of Science and Technology (NUST) started their interest in the biopolymer chemistry of this particular marine
molecule. The low melting point (approx. 17° C) of marine collagen from cold-water fish renders this biopolymer
                                                                                             C
unsuitable for production of stable capsules. In nature fish that lives at temperatures at 5° has a connective
tissue that must stay flexible at this temperature. The consequence is a collagen that melts at a much lower
temperature compared to mammalian collagen that has a body temperature of 37° C.

To circumvent this technical problem, carrageenan from red algae was added to elevate the melting point, to
make a firmer and more stable gel. One of the first trials in the test series performed resulted in a loose aqueous
gel with a melting point at around 35° C. The experiment was first considered a failure, before an application for
the blend was found – The blend was named Smids and is now patented.

Smids is, however, more than just a consistence regulating principle. The carrageenan component in Smids is,
however, so large that they always will stay at the surface. Due to all the negative charges carrageenan is also
able to bind substantial amounts of water. Carrageenan bound water on the skin surface will reduce the “Trans
Epithelial Water Loss” (TEWL) helping to conserve the humidity of the human skin.



5.5.3        Production of Zonase
The source of crude enzyme is hatching fluid from salmon eggs and thus
available in industrial quantities in Norway.

When salmon eggs hatches the fluid in which the hatching takes place is
collected, and further processed into different purities and Zonase
products (such as Zonase X for exfoliation).

The Company’s laboratory facilities for enzymes are located in Bergen,
Norway. Other production facilities are sub-contacted in Western Norway.


5.6          Patents, Trademarks and other IPR
Aqua Bio Group secures its intellectual property through patents of selected IPR. The company seeks to build a
patent portfolio to secure the critical basis of its technology, fabrication processes, and possible applications in the
cosmetic and dermatological fields. It is the policy of the Company to constantly evaluate and pursue patenting
opportunities of its R&D activities. UK, US and PCT patent applications for the Smids technology have been filed.

For detailed information regarding expenditure on research and development activities, please refer to section
8.6.

Patents Granted

Patents granted for Zonase:

                                                                                          Registered
Country/Area               Patent number             Patent register                                         Expires
                                                                                            date
                                                     Patentstyret- Styret for det
Norway                         314594                                                     14.04.2003        11.12.2017
                                                     industrielle rettsvern
                                                     US Patent & Trade Market
USA                 6,343,245 B1 /6,592,866 B2                                            15.07.2003        11.12.2017
                                                     Office
                                                     European Patent
EU                            1036166                                                     31.05.2006        11.12.2017
                                                     Organisation
Australia                      761292                Australian Patent Office             11.09.2003        11.12.2018
New Zealand                    504864                Commissioners of Patent,             31.03.2003        11.12.2018




                                                          24
                                                   Trademarks & Design.
                                                   The Patent Registry,
                                                   Intellectual Property
Hong Kong                   HK1030968                                                                    11.12.2018
                                                   Department, the Hong Kong
                                                   Special Administrative Region

Figure 5.3: Patents granted to Aqua Bio Group

Patent Applications

Patent applications for Smids:

                                                                                                             Registered
 Applied to                                     Application No.                      Patent
                                                                                                               date

 International (PCT) Patent Application      PCT/GB2006/001874           Topical FG/CG compositions          19.05.2006
                                                                          Gelatin-containing topical
 International (PCT) Patent Application      PCT/GB2007/001315                composition / skin             10.04.2007
                                                                                  penetration

Figure 5.4: Aqua Bio Group’s pending patent applications


Scope of IPR
The Company has granted Aquazym Technology AS a license to utilize Zonase outside of the dermatological and
cosmetic areas on an exclusive basis. No such applications have as yet been identified.


Other
In addition to patents, the Company maintains important and proprietary know-how and technologies related to
materials, production processes, quality control and other aspects of its business that are held as trade secrets.
Some of this know-how is central to the cost-efficient manufacturing of Zonase. This knowledge in combination
with patents is an important factor in protecting the Company’s existing and future businesses.


5.7           Research and Development Strategy
Short-term R&D activites will concentrate on exploitation and documentation of current technologies in the
commercialization process, especially in servicing potential customers.

The future objective of the Company’s R&D activities is twofold:
    •    Further document the properties of its technologies and products
    •    Develop new commercial applications for the Group’s ingredients and technology. The Aqua Bio Group
         is currently considering several potential patent applications based on the Zonase enzyme and the
         Smids technology. This process will require further documentation and testing


5.8           Key Competitive Advantage
The Aqua Bio Group has developed a unique product and technology platform. The key competitive advantages
of this platform are:
     •    Offers a new, attractive approach to central product features in the cosmetic industry
     •    Patented product and technology
     •    Low cost, high margin product
     •    The product and technology platform can be adapted to multiple dermatologic and cosmetic applications


5.9           Regulatory Approval
According to a decision made by The Norwegian Medicines Agency (Statens Legemiddelverk) on January 2,
2007 the enzyme Zonase is not considered being a medical drug, and consequently, no approval is needed.
Neither is the mechanical removal of dead skin cells by using Zonase considered being a medical application.
Zonase is probably the only protease enzyme, which in in vitro trials has not shown any toxic reactions to live
human cells. Extensive clinical testing has shown no allergic reactions by Zonase. Given the chemical properties




                                                        25
including the unique stability of the enzyme, this will make Zonase an ideal, active ingredient for use in skin-care
products and other cosmetics.


5.10         Property, Fittings and Equipment
The Aqua Bio Group has access to an enzyme laboratory facility with complete Benzamidine affinity
chromatography system, consisting of:
    •    columns with peristaltic pumps
    •    fraction collectors and
    •    fume hoods complying with the Norwegian HMS safety standard

The production facility includes:
    •    in-house facilities for gel electrophoresis
    •    western-blotting
    •    advanced enzyme kinetics, microscopic analysis and dialysis, allowing a vast array of molecular level
         analysis of the end-product and any of the intermediate steps of the production line

                                                              C    F), C     F)       C      F)
Further the production facility possesses storage space at 25° (77° 4° (39.2° and -18° (-0.4° for long
and short time storage of production chemicals and products.

The Company rents production and storage space, while owning the machinery and equipment. The book value
of the Company’s property, fittings and equipment is nil.

The Company is not aware of any environmental issues that may affect the Company’s utilization of its assets,
other than the general environmental issues pertaining to companies operating within the life science and
cosmetic industries as further described in section 2.4 above.


5.11         License Agreements
License agreement with Stiftelsen Biopolymer
In March/April 2005, the Company entered into an agreement with Stiftelsen Biopolymer and the inventors Ingvild
Johanne Haug, Kurt Ingar Draget and Olav Smidsrød (hereafter called “Stiftelsen Biopolymer”), regarding the
Company’s rights to Smids. Pursuant to the agreement, the Company is granted the right to register the patent
for Smids, against a consideration of NOK 200,000, with an additional NOK 1,000,000 when a patent is
registered. If such payment is not made, the agreement may be terminated.

Further, the Company is obliged to pay the following compensation to Stiftelsen Biopolymer for the use of the
invention:

    •    For sale of own products which include the use of the invention: 2.5 percent of net sale income (sale
         price deducted expenses for production, royalties to third parties, transport, duties etc.) to Stiftelsen
         Biopolymer
    •    For resale of the invention: 5 percent of the income to Stiftelsen Biopolymer

After the expiration of the patent (or if the patent cannot be registered), Stiftelsen Biopolymers has no right to
compensation from the Company. The Company is obligated to carry out all tests which are necessary to make
sure that the products it sells which contains the invention is not injurious etc. The liability for any injuries etc.
from the use of products containing the invention shall be borne by the Company, and is obliged to indemnify
Stiftelsen Biopolymer for any claims in that respect. The Company is obliged to maintain product liability
insurance for the use of the invention. Both parties are free to transport their rights and obligations under the
agreement, however so that Stiftelsen Biopolymer is entitled to demand a bank guarantee if the Company
transfers the agreement to a company or an individual which financial position is inferior to the Company’s
financial position. The Company has secured a right of first refusal for future technology invented by Stiftelsen
Biopolymer, provided such technology is relevant for the patent and which may be a competitive to the invention.




                                                          26
6                MARKET OVERVIEW
Aqua Bio Group targets suppliers within the cosmetic and dermatological market – in particular the market for
creams, lotions and ointments and products for treatment of skin disorders. Worldwide, thousands of different
products are being offered in this market segment. Aqua Bio Group’s main segment is Health and Beauty Aids
(HBA) which includes cosmetics, fragrances and personal care.


6.1              HBA (Health and Beauty Aids)
The market for HBA applications encompasses many different products, including:
        •    Skin lotions, moisturizing creams
        •    Anti-aging creams
        •    Make-up removers
        •    Acne scrubs/Cleansers
        •    Hair removals
        •    Suntan lotions and sunless tanners
        •    Diaper rash creams and ointments
        •    Oral care products
        •    Fragrances
        •    Deodorants
        •    Nail polish removers
        •    Sanitizing gels

Most Europeans use cosmetic products on a daily basis. In fact, over 5 billion cosmetic products are sold every
                                                         1
year to some 380 million consumers in the European Union .

Several thousand new or improved
products are brought onto the
market by the cosmetic industry
each year. This clearly
demonstrates that innovation is
important for the industry, and that
every producer in this marketplace
is continuously looking for new
products and packaging to maintain
or improve its competitiveness.

The cosmetic, toiletry and
perfumery market (C&T market) of
the 15 member states of the
European Union including the non-
EU members Norway and
Switzerland calculated at retail
sales prices at the point of sale
increased in 2005 by 1 percent to
                                  1
USD 80 billion according to Colipa ,
European cosmetic trade
association.

Hence, Europe is one out of three
important worldwide markets,                                 Figure: Western European Cosmetics and Toiletry Market 2007
Japan and US being the other two.                            Euros at RSP (Retail Sales Prices)
                                                             Source: Colipa Activity Report 2007, European Cosmetic Trade Association


Cosmeceuticals
Cosmeceuticals are cosmetic products with physiological accomplishments. In USA alone, the total sales of
cosmeceuticals and anti-aging products is estimated to have a volume of approximately USD 6 billion per
     2
annum , whereas the global market for such products is estimated to be more than USD 25 billion annually. The


1
    Source: Colipa, European Cosmetic Trade Association.”Colipa Activity Report 2007”. www.calipa.com
2
    Source: Freedonia Group:”Cosmeceuticals to 2010”. www.freedoniagroup.com




                                                                      27
cosmeceutical market has emerged rapidly over the last two decades and is one of the fastest growing segments
of the HBA market.
            3
A study shows that:
        •       Over half of consumers in the US and Europe are concerned about skin dryness, but many consumers
                are not acting upon these concerns
        •       Sensitive skin and rash concerns affects a significant proportion of European and US consumers
        •       More than a quarter of European and US consumers are actively addressing skin healing problems
        •       Consumers are concerned about the visible manifestations of aging



6.2                Key Players
The dermatological market is dominated by large international companies. The following table of Fortune 500
Companies - all having well known products with established brand names, illustrates a sample of companies that
may be potential license partners for Aqua Bio Group’s ingredients and technology:




Leading brands sell for more than USD 1 billion per year worldwide, or 50 – 100 million consumer units each.
The companies constantly search for novel products as well as new, documented ingredients and technologies to
improve and strengthen their brands. Aqua Bio Group’s unique ingredients and technology has the potential to
deliver a large number of different dermatological products with significant advantages for the consumer, as well
as for the manufacturer.


6.3                Competitors
There are a number of different companies that can be considered potential competition for Aqua Bio Group.
They fall into three categories:
    •     Raw material developers and suppliers
    •     Companies which manufacture the products for others (OEM)
    •     Independent R&D-driven companies

Worldwide, thousands of researchers and product developers strive to discover and develop new and improved
ingredients and technologies that may compete with those of Aqua Bio Group. Being protected by patents and
patent applications, the management of Aqua Bio Group is confident that the Company’s leading edge on its
particular field will not be infringed in years to come.



3
    Published by Datamonitor, April 4, 2007: “Meeting Beauty and Wellness Need through Cosmeceuticals” ( www.marketresearch.com)




                                                                     28
7           BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE
            GOVERNANCE
7.1         Incorporation of the Company
Aqua Bio Technology ASA was incorporated and registered with the Norwegian Register of Business Enterprises
on March 9, 2004 under the name of Biolink AS as a Norwegian private limited liability company with registration
number 886 582 412.


7.2         Articles of Association – Board and Management
Paragraph 5 of the Articles of Association (Enclosed in Appendix 1) give the following provisions for the
Company: “The company’s board of director comprises 3 to 6 board members according to further resolution of
the shareholders’ meeting. Binding signatures for the company are either jointly by the chairman of the board and
the chief executive officer or jointly by two board members. The board of directors may grant power of attorney.
The company shall have a chief executive officer.”


7.3         Board of Directors
In accordance with Norwegian law, the board of directors is responsible for administering the Company’s affairs
and for ensuring that the Company’s operations are organized in a satisfactory manner.

Below follows an introduction of the members of the Board:

Thor Arne Talseth (39), Executive Chairman. Mr. Thor A Talseth holds a Bachelor of Business Administration
from Trondheim Business School (TØH). In addition to being Chairman, Mr Talseth is employed as COO (80%)
and has the operational responsibility of commercializing the products of ABT. He has broad operational
experience from top management - and CFO positions from various industries and the finance sector. The recent
position was as Managing Director in Landsbanki Norway, a full scale corporate and investment bank, where he
was responsible for establishing the activity. Prior to Landsbanki Mr Talseth was CFO in the telecom company
Catch Communication ASA listed on Oslo Stock Exchange and before Catch he was Group CFO and later group
CEO in the European Seafood group Fjord Marin ASA. Owns 5.57 % of ABT through Ignite AS. Mr. Talseth’s
business address is Lillestranden 2, N-0250 Oslo.

Tone Bjørnov (47), Board Member. Mrs. Bjørnov holds a degree in business administration from the Norwegian
School of Management (BI) as well as qualifications in French and IT from the University of Oslo. She had a long
career with DnB NOR where she held several management positions. She is currently partner in the finance
consultancy company ValutaCorp AS and a board member of several Norwegian companies, including GGS
ASA, Bank1 AS and Spectrum ASA. Mrs. Bjørnov holds 0.44 % of the Company’s shares through Valutacorp AS.
Mrs. Bjørnov’s business address is Veslekroken 8b, N- 0379 Oslo.

Kjeld Rimberg (66), Board Member. MSc in civil engineering from the University Of Trondheim 1969. Employed
in research and research policy until 1981. Managing Director in Asplan and Norwegian State Railways 1982-
1990. Owner and Chairman Kjeld Rimberg Consulting AS from 1990. Chairman and board member Kongsberg
Group ASA 1989-96, State Wine Monopoly 1986-95, National Theatre 1992-2001. Mr. Rimberg is currently board
member of Aschehoug AS, Aviaplan AS, Powertech AS and Museum of Natural History. Consulting mainly for top
management and in national research policy. Owns 6.25 % of ABT through Kjeld Rimberg Consulting AS. Mr.
Rimberg’s business address is Meltzersgt. 4, N-0257 Oslo.

Bernt Theodor Walther (64), Board Member. Mr. Bernt Theodor Walther obtained a PhD in Biochemistry from
the University of Washington, US after studying medicine at the Univ. of Oslo. In addition to being a Board
member, Dr. Walther serves as ABT's general scientific advisor. He is a full professor of Molecular Biology at the
Univ. of Bergen, and serves on the Scientific Advisory Board of Gender Guide AS, a company with ties to IRIS,
Stavanger. Additionally, Walther is a board member of Zym Holding AS, which currently owns 2.84 % of the
Company. Mr. Walther’s business address is Universitetet i Bergen, Thormøhlensgate 55, Høyteknologisenteret,
N-5020 Bergen.

Anne Sofie Utne (48), Board Member. Mrs. Utne holds a Master of Economy from the Norwegian University of
Life Science (Universitetet for Miljø- og Biovitenskap). Mrs. Utne is currently employed in Kauna Management AS
as managing director (100 percent shareholder of the company) and works as an independent advisor. Her
recent position was head of the Aquaculture department of a branch specialist unit in DnB NOR Bank ASA, and
she has extensive experience in financial transactions related to national and international corporations within the
business (8 years). Mrs. Utne is currently also a Board Member of Nordlaks Produkter AS, Nordlaks Oppdrett
AS, Smolten AS and Seaborn AS (companies within the aquaculture sector). Holds 0.40 % of the Company’s
shares through Kauna Management AS. Mrs. Utne’s business address is Thormøhlensgate 55, N-5008 Bergen.




                                                        29
Figure below shows when the board members where first elected to the board and when their current term
expires:

Name                                               Date of first election           Expiration of current term
Thor Arne Talseth, Chairman                                    April 2009        Ordinary General Meeting 2011
Anne Sofie Utne, Board member                             September 2007         Ordinary General Meeting 2009
Bernt Theodor Walther, Board member                            May 2007          Ordinary General Meeting 2009
Tone Bjørnov, Board member                                   August 2008         Ordinary General Meeting 2010
Kjeld Rimberg, Board member                                  August 2008         Ordinary General Meeting 2011

Figure 7.1: Board member’s terms

Independence
The Board is independent of any sectional interests. The Board satisfies the requirement of having two board
members independent of shareholders owning more than 10 percent of the Company’s share capital and half of
the members independent of the executive management of the Company and the Company’s material business
contacts.

Thor Arne Talseth holds the position as both Chairman and Chief Operation Officer in the Company, as Mr.
Talseth’s experience and competence are deemed useful for the Company’s daily operations. Talseth also holds
options in the Company as described below. Thor Arne Talseth cannot be deemed to be independent of the
company’s executive management.

All other board members are considered to be independent of the Company’s major shareholders, executive
management and material business contacts.

Except for the above mentioned, the composition of the Board of Directors complies with the Norwegian Code of
Practice for Corporate Governance.

Board remuneration
The remuneration of the members of the Board of Directors is determined annually by the annual General
Meeting of the Company.

Board members received the following remuneration for their services for the financial year 2008:

Name                                               Year             Remuneration
Kjeld Rimberg, Chairman                            2008                  100 000
Anne Sofie Utne, Board member                      2008                  100 000
Bernt Walter, Board member                         2008                  100 000
Tone Bjørnov, Board member                         2008                  100 000
Kjetil Dahl, Board member                          2008                  100 000

Figure 7.2: Board member remuneration, 2008

The Company has not granted any loans, guarantees or other similar commitments to any member of the board
of directors and there are no agreements regarding extraordinary bonuses to any member of the board of
directors. There are no agreements with any members of the board, which provide for compensation payable
upon termination of the directorship.

Board member’s Shareholdings and Options
The following table sets forth information concerning ownership of the Company’s shares and options held, as of
the date of this Prospectus, by board members:




                                                       30
                                                                    Number of   Percent of total    Number of
Name                                        Title
                                                                       Shares     Share Capital        Options
Thor Arne Talseth / Ignite AS               Chairman / COO          3 983 644   5.57 %             3 000 000
Tone Bjørnov / Valutacorp AS                Board member            312 500     0.44 %
Bernt Theodor Walther / ZYM Holding AS      Board member            2 034 774   2.84 %
Anne Sofie Utne / Kauna Management
AS                                          Board member            285 000     0.40 %
Kjeld Rimberg / Kjeld Rimberg
Consulting AS / Kjeld Rimberg & Co AS       Board member            4 466 725   6.25 %

Figure 7.3: Board member’s shareholdings and options

Options Issued to Board Members
Upon taking the position as Chairman and COO, Thor Arne Talseth received the following options free of
consideration:
    • An option to acquire 1,500,000 ordinary shares in the Company at a strike price of NOK 0.20 per Share.
        The option may be exercised until 1 August 2010.
    • An option to acquire 1,500,000 ordinary shares in the Company at a strike price of NOK 0.25 per Share.
        The option may be exercised until 1 August 2011.

For additional information about issued options see section 9.4.

Additional Services and Remuneration
Due to the Company’s limited organization and resources, board members have participated in the daily
management of the Company from second half of 2008 until medio March 2009. Further details of their
compensation can be found in figure 9.6.


7.4         Executive Management
To the Company’s knowledge, there are no issues related to the members of the executive management making
them unfit to participate in the management of a listed company. Furthermore, the Company’s executive
management has sufficient expertise to satisfy the requirements for correct management and distribution of
information.

As at the date of publication of this Prospectus, the Company’s management comprises the following people:

Arild Roar Rasmussen, CEO (59). Mr. Rasmussen holds a degree as cand. polit. from the University in Bergen.
He has a broad managerial experience from the government and from commercial enterprises. He served from
1979 to 1986 as Councilman (“rådmann”) in the municipality of Fusa, Norway. From 1986 to 1990 he was
Personnel and Organization Manager for Vestdata/Nordata AS and from 1990 to 2001 he served as CEO of
Bolaks AS. From 2001 to 2006 he was the Chairman/CEO of Aqua Bio Technology AS. He has served on
several boards and is currently CEO and Chairman of A-ZYM AS. Mr. Rasmussen holds a 1.37 % of the shares in
Aqua Bio Technology privately and through A-ZYM AS. Business address: C. Sundts gate 51, N-5004 Bergen.

Thor Arne Talseth, COO (39). See details under board members.


Compensation to Management 2008 (Figures in NOK)
                                                                                                Other Annual
Name                                                Year            Salary      Bonus
                                                                                               Compensation
Arild Roar Rasmussen, CEO                           2008           785 955*

Figure 7.4: Compensation to management, 2008

*Arild Roar Rasmussen has been hired from Bolaks AS in the role as CEO and payment of NOK 785 955 has
been made to Bolaks AS. In 2008 Arild Roar Rasmussen received NOK 577 130 in remuneration from Bolaks AS.

When signing the employment agreement with Thor Arne Talseth, Bolaks AS and Zym Holding AS committed
themselves to a transaction where Thor Arne Talseth would receive 724 950 shares from Bolaks AS and 508 694
shares from Zym Holding AS without any compensation. The transaction has been completed.




                                                        31
Management’s Shareholding and Options
The following table sets forth information concerning ownership of the Company’s shares and options held, as of
the date of this Prospectus, by the senior management.

                                                                  Number of      Percent of total    Number of
Name                                       Title
                                                                      Shares      Share Capital        Options
Thor Arne Talseth - Ignite AS              Chairman / COO          3 983 644             5.57 %       3 000 000
Arild R. Rasmussen - A-ZYM AS              CEO                       978 000             1.37 %

Figure 7.5: Management’s shareholdings and options

Loans or Guarantees to the Management
The Company has no outstanding loans or guarantees to any member of the management.

Severance Pay etc.
No members of the Board of Directors or management have contracts with the Company or its subsidiary that
provide for benefits upon termination.


7.5         Incentive Programs
Except for options issued to Thor Arne Talseth as described under section 7.3 and options issued under previous
option programs as described in section 9.4, there are no incentive programs.


7.6         Conflicts of Interest etc.
CEO has ownership in Aquazyme Technology AS who has been granted rights to use of the enzyme Zonase
outside the dermatological and cosmetic areas on an exclusive basis, see section 9.11.

There are no other potential conflicts of interest between any duties to the Company of the members of the Board
or the Company’s management, and their private interests or other duties. Nor are there any family relationships
between such persons.

Over the five years preceding the date of this Prospectus, the members of the Board and senior management
presently have, and have held, the following directorships (apart from the directorship in the Company).


                                                                Current                Directorships and
                                                                Directorships and      Partnerships
Name                      Company                               Partnerships           previous 5 Years
Board of Directors
Thor Arne Talseth         Hermann Wildenveys gt 1 AS            Chairman, CEO
                          Nor Marine Invest AS                  Chairman, CEO
                          Ignite AS                             Board Member, CEO
                          Helin AS                              Board Member
                          Landsbanki Norway                     Managing Director      2006-08
                          Catch Communications ASA              CFO                    2005-06
                          Fjord Marin ASA                       CEO / CFO              2000-05
Kjeld Rimberg             Kjeld Rimberg Consulting AS           Chairman
                          Aschehoug AS                          Board Member
                          Aviaplan AS                           Board Member
                          Powertech AS                          Chairman
                          Museum of Natural History             Board Member
Bernt Theodor Walther     Zym Holding AS                        Board Member
                          Norsk Selskap for Utviklingsbiologi
                          AS                                    Deputy Chairman
                                                                Deputy Board
                          Aquazyme Technology AS                Member
                                                                Member of Scientific
                          Gender Guide AS                       Advisory Board
                          American Physiological Society        Member
Tone Bjørnov              GGS ASA                               Board Member




                                                      32
                            Spectrum ASA                            Board Member
                            Bank1 Oslo AS                           Board Member
                            Fish Pool ASA                           Board Member
                            BB Finans ASA                           Board Member
                            ValutaCorp as                           Board Member
                                                                    Member of Control
                            Santander Consumer Bank AS              Committee
                            Bane Tele AS                            Board Member             2006-2009
                            Capitalis ASA                           Board Member             2007-2009
                            DnB NOR ASA                             General Manager          2002-2005
Anne Sofie Utne             Kauna Management AS                     Chairman, CEO
                            Nordlaks Produkter AS, Nordlaks
                            Oppdrett AS, Smolten AS                 Board Member
                            DnB NOR Fisheries & Aquaculture
                            Dept.                                   Manager                  2004 - 2007

Executive
Management
Arild R. Rasmussen,
CEO                         Zym Holding AS                          Board Member             2005-2008

                            Akvaforsk Genetics Center AS            Board Member             2001-2008
                            A-ZYM AS                                Chairman, CEO
                            Aquazyme Technology AS                  Chairman, CEO            2006-2008

Figure 7.6: Current and previous director- and partnerships

There is no formal arrangement or understanding with major shareholders, customers, suppliers or others,
pursuant to which any member of the administrative, management, supervisory bodies or executive management
has been selected as a member of the administrative, management or supervisory bodies or member of senior
management.


7.7          Employees and Consultants
As of the date of the Prospectus, The Company has employees. The table below illustrates the development in
number of employees over the last three years, as per the end of each calendar year for 2006 to 2008.

Company                               Dec 31, 2008         Dec 31, 2007         Dec 31, 2006
Aqua Bio Technology ASA               3                    5                    5
Kilda Biolink AS                      1                    6                    5
Total                                 4                    11                   10

Figure 7.7: Number of employees


7.8          Pension Obligations
The Company conforms to existing legislation regarding a pension scheme for its employees. This implies that 2
percent of employee salaries are paid as a contribution to a privately administered pension insurance plan. The
Company has no further payment obligations once the contributions have been paid. The contributions are
recognized as employee benefit expense when they are due.


7.9          Fraudulent Offence, Bankruptcy etc
Except for the following members of the Board and management, no other member of the Board or management
has been subject to bankruptcy, receivership or liquidation proceedings for the last five years:

      •   Thor Arne Talseth was Managing Director of Landsbanki Norway from April 1, 2006 to October 31, 2008
          and led the company through its receivership proceedings during the fall of 2008.
None of the members of the Board or management have been convicted of any fraudulent offence or been
subject to any official public incrimination or sanctions by statutory or regulatory authorities (including designated




                                                          33
professional bodies) in acting as founder, director or senior manager of any company for the last five years, nor
has any such members been disqualified by a court from acting as a member of management or supervisory
bodies of any issuer or from acting in the management or conduct of the affairs of any issuer for the last five
years.


7.10        Corporate Governance
Corporate Governance Principles
The corporate governance principles of the Company comprise the framework of guidelines and management
principles regulating the division of roles and responsibilities between and working procedures for the owners, the
Board and the executive management of the Company.

The current corporate governance documents were resolved by the Company’s Board on September 13, 2007.

Aqua Bio Technology believes that sound corporate governance contributes to increased shareholder value
through improved growth and higher profits, as well as lower capital expenditures. Corporate governance in the
Company is based on openness and equal treatment. Investor confidence is maintained and developed through
open and accountable investor information. The Board and the management are committed to ensuring
transparency within the business, fair treatment of all shareholders and accountability in all forms of
communication.

Code of practice
Aqua Bio Technology’s corporate governance principles are in accordance with the recommendations in the
Norwegian Code of Practice for Corporate Governance of November 28, 2006 (the “Code”). The Company
complies with all the main principles of the Code, with the exception of the following:

    •    The Board has not considered it necessary to have a deputy chairman due to the smaller size of the
         Company. The Board will continuously consider the need for a deputy chairman.

    •    The Board has not considered it necessary to appoint board committees to prepare financial reporting
         and compensation to the executive management. This is because the Aqua Bio Group is a small and
         transparent Group with no complicated salary principles and adequate competence on financial reporting
         in the Board and in the executive team. The Board will continuously consider the need for establishing
         financial reporting and/or compensations groups in the Board.

    •    The Extraordinary General Meeting held April 16, 2009 resolved that board members may participate in
         the Company’s option program.

    •    The Board will act in accordance with the Code in the case of a take-over bid. The Board has not
         considered it necessary to adapt other or more comprehensive guidelines than the Code.

The authorization to increase the Company’s share capital is valid 2 years from its registration in the Register of
Business Enterprises. The purpose of the authorization is to give the Board financial capability to complete
transactions which may contribute to strengthen the Company’s commercial position, equity or financial stability.
Aqua Bio Technology provided a more detailed review of the Company’s principles of corporate governance in the
2008 annual report, including descriptions of remuneration of the members of the Board and executive
management, agreements with close associates as well as internal control and risk management regarding to
financial reporting.

The Company has established appropriate procedures to ensure information to the executive management,
proper handling of such information and distribution of information to the financial market. Information is
published through Oslo Børs’ information system and on the Company’s web-page and sent to the shareholders.

The Company has established a nomination committee and adopted instructions for the nomination committee.




                                                        34
8            OPERATING AND FINANCIAL INFORMATION
Figures for The Company for the years 2006, 2007 and 2008 are presented below. International Financial
Reporting Standards (IFRS) have been applied as the accounting principles for listed companies in Norway with
effect as of January 1, 2005.

The financial statements for these three years are audited and give a true and fair view of the financial position of
the Group. Financial information for the years 2006 to 2008 are presented in this section.

The audited consolidated financial information for 2006 to 2008 is prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by EU.

For further comments regarding the Company's accounts and explanatory notes, see the Annual reports for 2006,
2007 and 2008 included as Appendices 2, 3 and 4 to this Prospectus.


8.1          Summary of Significant Accounting Principles
The principal accounting policies applied in the preparation of the Company’s consolidated financial statement
taken from the yearly financial report 2008 are set out below.

Basis of preparation
The consolidate financial statement of Aqua Bio Technology ASA is prepared in accordance with International
Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards
Board (IASB) as stipulated by the EU.
The consolidated financial statements are prepared according to the historical cost principle.

The following are standards and interpretations that have been approved but not implemented on the
balance sheet date:

Amendment to IFRS 2 Share-based Payment: Vesting conditions and cancellations
This change to IFRS 2 provides clearer guidance on what are vesting conditions and what are not. It also
regulates the accounting treatment of rights in share option arrangements that are cancelled when conditions
other than vesting conditions are not fulfilled. The new requirements come into effect on 1 January 2009. The
Group plans to implement the new requirements with effect from 1 January 2009.

IFRS 3 (revised) – Business Combinations
In relation to the existing IFRS 3, the revised standard involves certain changes and clarifications about the
application of the acquisition method. Significant amendments include inter alia goodwill with a gradual
acquisition, minority interests, and conditional payment and acquisition costs. The effective date of these revisions
is set for 1 July, but IFRS 3 (R) is still not approved by the EU. The Group plans to apply IFRS 3 (R) with effect
from 1 January 2010.

IFRS 8 – Operating Segments
IFRS 8 replaces IAS 14 – Segment reporting. The standard requires the Group to use a managerial
approximation for the identification of segments. In general, the information to be reported should be the same as
that used by the management to evaluate segmental results and determine how resources should be allocated to
the segments. IFRS 8 requires details about what the preparation of segment information is based on, and from
which type of products and services each segment draws revenues. IFRS 8 is effective from 1 January 2009. The
Group will apply IFRS 8 with effect from 1 January 2009.

IAS 1 (revised) – Presentation of Financial Statements
The revised standard includes changes in the financial statements, particularly the equity statement, and
introduces a Statement of Comprehensive Income (a statement of non-owner transactions showing the total
amount of recognised income and expense. IAS 1 (R) is effective from 1 January 2009. The Group will apply IAS
1 (R) with effect from 1 January 2009.

IAS 27 (revised) – Consolidated and Separate Financial Statements
In relation to the present IAS 27, this revised standard provides more guidance about the accounting treatment of
changed ownership interest in a subsidiary and disposal of an investment in a subsidiary. It also amends current
rules related to the distribution of loss between the minority and the majority in that a deficit shall be charged to
the minority even though it is negative. IAS 27 (R) is set to come into effect on 1 July 2009 but is still not approved
by the EU. The Group plans to apply IAS 27 (R) with effect from 1 January 2010.




                                                          35
Amendment to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial
Statements – Puttable Financial Instruments
The amendment in IAS 32 means that some sales options shall be classified as equity. The change in IAS 1
applies to the requirement for notes to the financial statements. The date set for IAS 32 and IAS 1 taking effect is
1 January 2009 but the requirements have still not been approved by the EU. The Group plans to apply the
amended versions of IAS 32 and IAS 1 with effect from 1January 2010.

Amendment to IAS 39 Financial Instruments; Recognition and Measurements – Eligible Hedged Items
The amendment to IAS 39 involves a clarification of the rules where a financial instrument (hedged item) is
hedged in accordance with selected risks or components of cash flows. The approved amendments primarily give
further guidelines for the hedging of unilateral risk (hedging with options) and hedging of inflation risk, but also
clarify the guidelines that the selected risks and cash flows must be identifiable and reliably measureable. The
date set for implementation of the amendment to IAS 39 is 1 July 2009, but the amendment is still not approved
by the EU. The Group plans to apply the amended version of IAS 39 with effect from 1 January 2010.

IFRIC 13 – Customer Loyalty Programmes
The interpretation deals with how loyalty programmes that an entity has with its customers as a reward for
previous purchases, as well as incentives for further purchases, shall be recognised and measured in the financial
statements. The interpretation was to have been effective from 1 July 2008 but had not been approved by the EU
at that point in time. The interpretation is now approved by the EU for the 2009 accounting year. The Group will
apply IFRIC 13 with effect from 1 January 2009.

IFRIC 17 – Distributions of Non-cash Assets to Owners
The interpretation deals with the accounting treatment of payments to owners that are settled in assets other than
cash. The interpretation is set for implementation with effect from 1 July 2009, but has still not yet been approved
by the EU. The Group will apply IFRIC 17 with effect from 1 January 2010.

The Group expects that the implementation of IFRS 8 will result in different segmentation. IFRS 8 will also result
in different measurement rules for segment results, segment assets and segment liabilities. Beyond this, the
implementation of the amendments listed above is not expected to have any significant effect on the consolidated
financial statements at the dates of implementation.

IASB’s annual improvement project
Amendments to various standards have or will come into effect in 2009. Below is a list of the most significant
amendments that can have an impact on recognition, measurement and notes:
   • IFRS 5 Non-current assets held for sale and discontinued operations: With the planned sale of
        controlling interest in a subsidiary, all assets and liabilities in the subsidiary shall be classified as held for
        sale even though the enterprise has the intention of holding a non-controlling share after the sale.
   • IAS 1 Presentation of financial statements: Assets and liabilities classified as held for sale, in conformity
        with IAS 39, are not automatically classified as current in the balance sheet.
   • IAS 16 Property, plant and equipment: Fixed assets that are owned for leasing out purposes and which
        at the end of the lease period are sold as part of ordinary operations shall be transferred to stock.
   • IAS 19 Employee benefits:
             o Changes in the definition of the terms: Costs with previous periods’ earned pension, return on
                  pension funds, current and other non-current payments.
             o Changes in pension schemes that reduce the payments related to future earnings are treated
                  as deductions.
             o The reference to IAS 37 concerning conditional obligations is removed.
   • IAS 20 Accounting for Government Grants and Disclosure of Government Assistance: Future loans from
        the state at an interest rate lower than the market rate are not exempt from the requirement to find an
        estimated rate. The difference between the loan received and current value shall be accounted as a
        government grant.
   • IAS 28 Investments in associates and IAS 31 interests in joint ventures: Change in specific note
        information if such investments are recognised at fair value in accordance with IAS 39.
   • IAS 36 Impairment of assets: Specific information shall be provided in the notes in connection with
        depreciation tests when discounted future cash flows are used to estimate fair value less sales costs.
   • IAS 38 Intangible assets: Expenses relating to advertising and sales promotions shall be taken to cost at
        the date the goods are made available for companies or when the service is received.
   • IAS 39 Financial instruments: Recognition and measurement:
             o The change in the use of a derivative, with identification of the derivate as a hedging instrument
                  or with cancellation of hedging, shall nit be regarded as a reclassification. Derivatives can
                  therefore be included in or removed from the category “fair value with value changes over the
                  result” after first-time recognition.
             o With the recalculation of amortised cost according to IAS 39.AG8 for an instrument that is or has
                  been an object for fair value hedging, an effective interest rate shall be applied that accounts for
                  the effect of hedging, and not the original effective interest rate.




                                                           36
              o   The reference to ”segment” is removed in relation to the identification and documentation of a
                  hedging situation

None of the changes will result in significant changes in the Group’s application of accounting principles or notes
to the financial statements.

Exercising professional judgement
The preparation of financial statements in conformity with IFRS requires the use of estimates. It also requires
management to exercise professional judgement in the process of applying the Company’s accounting policies.
The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed in Note 4.

Consolidation basis
Subsidiaries
Subsidiaries are all entities (including enterprises with restricted object) where the Group has a controlling
influence over the entity’s financial and operational strategy, normally through ownership of more than 50 per cent
of voting shares. Determination of whether a controlling influence exists includes the effect of potential voting
rights that can be exercised or converted on the date of balance. Subsidiaries are consolidated from the time
control is transferred to the Group.

The acquisition method is applied for accounting purposes with the purchase of subsidiaries. The acquisition price
is measured at fair value of the assets that are rendered as compensation with the purchase, equity instruments
that are issued, obligations incurred with the transfer of control and direct costs tied to the acquisition itself.
Identifiable acquired assets and liabilities and conditional obligations taken over or incurred are recognised in the
financial statements at fair value on the date of acquisition.

Intragroup transactions, accounts and unrealised profit between group companies are eliminated. Unrealised loss
is eliminated but is regarded as an indicator of the loss in value in relation to the depreciation of the transferred
asset. Accounting principles in subsidiaries are changed where this is deemed necessary to achieve conformity
with the consolidated accounting principles.

The following companies are included in the consolidation:

Name                                                               Location          Ownership and voting share
Aqua Bio Technology ASA                                           Sandefjord                             100 %
Kilda Biolink AS                                                  Sandefjord                             100 %

Segment reporting
A business segment is part of the enterprise that delivers products or services that is subject to risks and returns
that are different from those of other business areas. A geographical market (segment) is a part of the enterprise
that delivers products and services within a limited geographical area that is subject to risks and return that are
different from other geographical markets.

The Company has identified one business segment; sale of cosmetic products, and three geographical segments;
Norway, Sweden and others. As a result of the sale of the cosmetics business at the beginning of Q4 2008,
segment reporting was concluded as of Q3. Financial information relating to segment reporting to and including
Q3 2008 is presented in Note 5.

Foreign currency translation
(a) Functional and presentation currency
The consolidated financial statements are presented in NOK, which is the parent company’s functional and
presentational currency.

(b) Transactions and balance sheet items
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.

Tangible fixed assets
Tangible fixed assets are recognised at acquisition cost less depreciation. Acquisition cost includes expenditure
that is directly related to the acquisition of the fixed asset. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying




                                                         37
amount relating to the replaced parts is recognised in the income statement. All other repairs and maintenance
are charged to the income statement during the financial period in which they are incurred.

Tangible fixed assets are depreciated using the straight-line method over the assets expected useful life as
follows:
–        Fixtures and fittings, tools, office machinery and similar assets:          3 - 5 years

The residual values and useful lives of the assets are reviewed, and adjusted if necessary, at each balance sheet
date.
When the balance sheet value of an asset is higher than the estimated recoverable amount, the value is written
down to the recoverable amount. By recoverable amount is meant the highest value of an asset or fair value of a
cash-generating entity less sales costs and its used value. If one of these amounts exceeds the asset’s balance
sheet value, the asset has not fallen in value, and it is not necessary to estimate the other amount.

Gains and losses on disposals are recognised in the income statement net, and constitute the difference between
sale price and balance sheet value.

Intangible assets
Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating
to the design and testing of new or improved products) are recognised as intangible assets only when the
Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for
use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future
economic benefits, the availability of resources to complete the asset and the ability to measure reliably the
expenditure during the development. Other development costs are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised in the balance sheet in subsequent
periods. Development costs that have a limited useful life and that have been capitalised are amortised from the
commencement of the commercial production of the product on a straight-line basis over the period of its
expected useful life (maximum 3 years). Patents and similar rights are depreciated from the date they are allotted
according to the straight-line method over the patents’ or similar rights’ expected useful life.

The Company has no intangible assets with undefined useful lives. Balance sheet development costs are tested
for loss in value in accordance with IAS 36. Current development projects are tested for loss in value at each
year-end.

Inventories
Inventories are assessed at the lower of cost and net realisable value. Cost is determined using the first-in, first-
out (FIFO) method. The Company has outsourced its production of finished products. The cost of finished goods
and work in progress therefore comprises raw materials, direct costs to the producer and other direct costs. The
cost of servicing loans is not included. Net realisable value is the estimated selling price less costs for the
production and sale of finished products.

Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, 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 the receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue)
are considered 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
original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognised in the income statement within selling and marketing costs.
When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables.
Subsequent recoveries of amounts previously written off are credited against selling and marketing costs in the
income statement.

Government grants
Government grants are recognised under other receivables when it can be confirmed with reasonable certainty
that the grant will be received and that appurtenant conditions followed. Grants are entered as income over the
accounting periods that are necessary to compare them with the related costs for which they are meant to
compensate on a systematic basis. In 2008, the Company made use of a special tax-based arrangement
(skattefunnordning) which was curtailed in the financial year.

Cash and cash equivalents




                                                            38
Cash and cash equivalents includes cash in hand, deposits on call at banks, and other short-term, easily
liquidated investments with a maximum 3 months original maturity. Bank overdrafts, including loans, are shown in
the balance sheet under current liabilities.

In the consolidate cash flow statement, cash and cash equivalents are as defined above, but corrected for called
on overdrafts.

Trade payables
Trade payables are recognised initially in the balance sheet at fair value and subsequently measured at amortised
cost using the effective interest method.

Loan facilities
Loans are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, loans are
recognised at amortised cost calculated using the effective interest method. The difference between the amount
borrowed (less transaction costs) and the redemption value is recognised in the income statement over the period
of the loan.

Payable and deferred tax
The tax cost consists of tax payable and the change in deferred tax.

Tax payable
Tax payable consists of the taxable result for the year. Taxable result is different from the accounting result
because certain revenues and expenditures are accounted tax-wise to other periods in relation to the normal
accounting period. In addition, certain revenues and expenditures are not part of the tax base. The Company’s tax
payable is based on tax rates that are agreed or are primarily agreed on the date of balance.

Deferred tax/tax advantage
Deferred tax advantage is recognised when it is deemed probable that the Company will have adequate taxable
earnings in subsequent periods to be able to utilise the tax advantage. The companies recognise previously
unrecognised deferred tax advantages to the extent it has become probable that the company can utilise the
deferred tax advantage. Similarly, the company will reduce its deferred tax advantage to the extent the company
no longer regards it as probable that it will be able to utilise the deferred tax advantage.

Deferred tax and deferred tax advantage are measured based on expected future tax rates to the companies in
the Group where temporary differences have arisen.

Deferred tax and deferred tax advantage are accounted at nominal value and are classified as financial assets
(non-current liabilities) in the balance sheet. The tax rate used is the tax rate that applies at the date for reversing
of temporary differences.

Tax payable and deferred tax is recognised direct against equity to the extent the tax items are related to equity
capital transactions.

Employee benefits and share-based remuneration
Retirement benefit obligations
The Company refers to current statutory provisions concerning pension saving for its employees. This means that
2% of the employees’ earnings is paid as a contribution to a separate legal entity that administers the employees’
pension schemes. The Company has no legal or other obligation to undertake further payments after the
contribution is paid. Pension contributions are recognised as payroll costs when they fall due.

Share-based remunerations
The fair value of allotted share options is factored in as a payroll cost with a corresponding increase of the equity
capital. Fair value is measured at the time the share options are allotted and is distributed over the periods until
the share option owner has earned an unconditional right to use the options. The fair value of allotted share
options is measured using the Black & Scholes model (B&S), which takes account of the duration and conditions
for the allotment of the options. The amount factored in as a cost is adjusted to reflect the actual number of share
options earned, apart from instances where lapse is only attributable to the share price not reaching the limit for
recovery.

Lease agreements
Lease agreements where a significant part of the risk and return related to ownership is retained by the lessor are
classified as operational lease agreements. Lease payments relating to operational agreements are recognised
on a straight-line basis over the period of the lease.




                                                           39
Revenue accounting
During the accounting year the Company has produced and sold cosmetic products to wholesalers (up to and
including Q3). During the accounting year the Company has produced and sold cosmetic products to wholesalers
(up to and including Q3). Proceeds from the sale of goods are recognised in the income statement when the
Company has delivered the goods to the wholesaler. The wholesaler may choose whatever sales channel he
prefers, and is also free to set the price of the product, and there are no unfulfilled obligations that can affect the
wholesaler’s acceptance of the product. Delivery is not complete until the products are dispatched to an agreed
location and when the risk of loss and obsolescence is transferred to the wholesaler. In addition, the wholesaler
must have accepted the delivery as part of the contract, the deadline for submitting complaints must have expired
or there must be proof that all criteria related to the delivery are satisfied. Sales revenue consists of the product’s
fair value minus VAT and any discounts.


8.2          Critical Accounting Estimates and Judgments
Estimates and assessments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are considered likely under the current circumstances. Nothing has
happened in the year to suggest that the basis on which estimates and assessments are made should be
changed, and thus no changes have been noted in effects related to these.

The Group prepares estimates and makes assumptions related to the future. The accounting estimates resulting
from this will by definition seldom be in complete accordance with the final result. Estimates and assumptions that
represent a significant risk for major changes in the balance sheet value of assets and liabilities during the next
accounting year are discussed below.

Depreciation and Devaluation of Intangible Assets
Intangible assets constitute a substantial portion of the Company’s balance. Estimated expected useful life and
related depreciation rates are critical factors for the Company. Estimated expected life is subject to reassessment
at the end of each financial year. Changes in estimates could have a significant effect on the Company’s results.

The Company’s intangible assets are assessed yearly for possible devaluation. The tests to determine any
decrease in value are based on estimates related to cash-generating units. The estimates are based on
assumptions regarding future cash flow which is discounted according to the chosen discount rate. Finding the
appropriate required rate of return and basing the calculation on the appropriate real economy assumptions have
represented a major challenge in 2008. Conf note 7.

Deferred Tax/Deferred Tax Advantage
The Company has a considerable conveyable tax-related deficit. Following the acquisition of Kilda Biolink AS in
May 2007 and the assets identified in connection with the purchase price allocation, the deferred tax advantage
identified is balanced against tax.


8.3          Historical Consolidated Financial Information
The consolidated financial information for 2006, 2007 and 2008 presented below has been derived from the
Company’s audited consolidated financial statement for the years ended December 31, 2006, December 31, 2007
and December 31, 2008 in accordance with International Financial Reporting Standards (IFRS) as adopted by
EU. The audited consolidated financial statements for 2006, 2007 and 2008 are included in Appendices 2
through 4 and include income statements, balance sheets, cash flow statements, statements of changes in equity,
accounting principles, notes and opinions from the Company’s auditor. The financial information presented in this
Prospectus should be read in conjunction with those audited financial statements.

Consolidated Income Statements 2006 - 2008
The table below includes the audited consolidated income statements for the Company for 2006, 2007 and 2008.

Figures in NOK 1,000                                           IFRS               IFRS               IFRS
                                                               2008               2007               2006

Revenues
Operating revenues                                             4 783              7 038              7 520
Other revenues                                                 -                  -                  -
Total revenues                                                 4 783              7 038              7 520

Expenses
Cost of goods sold                                             (4 696)            (6 909)            (4 405)
Salaries and social costs                                      (4 513)            (5 183)            (2 387)




                                                          40
Other Operating expenses                                   (18 253)           (9 616)         (4 109)
Operating profit/(loss) before depreciation - EBITDA       (22 679)           (14 671)        (3 381)

Write-off                                                  (18 000)
Depreciation                                               (8 371)            (5 816)         (788)
Operating profit                                           (49 049)           (20 487)        (4 169)

Other interest income                                      93                 106             71
Other interest expenses                                    (284)              (415)           (176)
Operating result before taxes                              (49 240)           (20 795)        (4 274)

Taxes                                                      (13 151)           (8 821)         -
Net profit/(loss) for the year                             (36 089)           (11 974)        (4 274)
Attributable to:
Minority interests                                         -                  -               -
Equity holders of the parent                               -                  -               -

Earnings per share
- Basic                                                    (1.88)             (0.92)          (0.59)
- Diluted                                                  (1.88)             (0.92)          (0.59)

Figure 8.1: Consolidated income statements 2006 - 2008


Consolidated Balance Sheets 2006 – 2008
The table below includes the audited consolidated balance sheets for the Company for 2006, 2007 and 2008.

Figures in NOK 1,000                            IFRS                  IFRS                IFRS
                                                31.12.2008            31.12.2007          31.12.2006

ASSETS

Non-current assets
Furniture, fittings and equipment               383                   368                 96
Intangible assets                               38 460                68 971              6 619
Total non-current assets                        38 844                69 339              6 715

Current assets
Inventories                                     33 240                37 129              9 098
Trade and other receivables                     3 222                 4 640               2 895
Cash and cash receivables                       147                   1 367               129
Total current assets                            36 610                43 136              12 122

TOTAL ASSETS                                    75 454                112 475             18 836



EQUITY AND LIABILITIES

Share capital                                   3 849                 3 601               150
Share premium reserve                           111 332               101 630             15 270
Retained earnings                               (53 789)              (18 356)            (6 381)
Total Equity Capital                            61 391                86 875              9 039

Non-current liabilities
Deferred taxes                                  3 823                 16 974              -
Borrowings                                      3 000
Other long-term liabilities                     3 080                 1 263               2 179
Total non-current liabilities                   9 903                 18 237              2 179

Current liabilities
Trade and other payables                        2 500                 4 626               3 398
Borrowings                                      -                     -                   3 490
Provisions for other liabilities and charges    1 660                 2 737               730
Total current liabilities                       4 160                 7 363               7 618




                                                     41
Total liabilities                                14 062                 25 608                 9 798

TOTAL EQUITY AND LIABILITIES                     75 454                 112 475                18 836

Figure 8.2: Consolidated balance sheets 2006 - 2008


Consolidated Cash Flow Statements 2006 - 2008
The table below includes the audited consolidated cash flow statements for the Company for 2006, 2007 and
2008.

Figures in NOK 1,000                               IFRS                  IFRS                  IFRS
                                                   2008                  2007                  2006

Cash flow from operations
Net profit before tax                              (49 240)              (20 795)              (4 274)
Depreciation                                       8 371                 5 816                 788
Write-off                                          18 000
Changes in inventory                               3 889                 1 969                 (7 540)
Loss – sales of assets                             6 169
Changes in accounts receivable                     1 418                 (442)                 (1 215)
Changes in accounts payable                        (2 126)               1 067                 2 556
Changes in other short term liabilities and
charges                                            -                     -                     157
Net cash flow from other operating activities      (13 521)              (12 386)              (9 529)

Cash flow from investment activities
Purchase of furniture, fittings and equipment      -                     -                     -
Receipts/payments in connection with other
investments                                        (2 044)               (1 945)               (5 276)
Net cash flow from investment activities           (2 044)               (1 945)               (5 276)

Cash flow from financing activities
Proceeds from issuance of ordinary shares          9 950                 19 029                9 120
Proceeds from borrowing                            4 817                 (1 817)               1 634
Stock based options                                655
Changes in other short term payables               (1 078)               3                     1 800
Cash balance adjustments related to Kilda
Biolink AS acquisition                             -                     44                    -
Net cash flow from financing activities            14 345                17 260                12 554

Net changes in cash and cash equivalents           (1 220)               2 928                 (2 250)
Cash and cash equivalents in beginning of
period                                             1 367                 (1 561)               689
Cash and cash equivalents at the end of the
period                                             147                   1 367                 (1 561)

Figure 8.3: Consolidated cash flow statements 2006 - 2008



Consolidated Statements of Changes in Shareholders’ Equity 2004 – 2008
The table below includes the audited changes in equity for the Company from 2004 until the date of this
prospectus.

                                                                    Share
Figures in NOK 1,000                Share          Own              premium         Retained           Total
                                    capital        shares           reserve         earnings           equity

Issue of share capital              100            -                -               -                  100
Net profit for the year                                                             (485)              (485)
Equity pr 31.12.2004                100            -                -               (485)              (385)

Issue of share capital              31             -                6 169           -                  6 200
Net profit for the year                                                             (1 623)            (1 623)




                                                         42
Equity pr 31.12.2005                131             -                 6 169             (2 107)         4 193

Issue of share capital              19              -                 9 101                             9 120
Net profit for the year                                                                 (4 274)         (4 274)
Equity pr 31.12.2006                150             -                 15 270            (6 381)         9 039

Issue of share capital              3 451           -                 88 376                            91 827
Placement costs                                                       (2 016)                           (2 016)
Net profit for the year                                                                 (11 974)        (11 974)
Equity pr 31.12.2007                3 601           -                 101 630           (18 356)        86 875

Issue of share capital              248             -                 10 894                            11 142
Placement costs                                                       (1 192)                           (1 192)
Share based options                                                                     655             655
Net profit for the year                                                                 (36 089)        (36 089)
Equity pr 31.12.2008                3 849           -                 111 332           (53 789)        61 391


*Equity according NGAAP 31.12.04 identical to equity according to IFRS 01.01.05
Figure 8.4: Consolidated statements of changes in shareholders’ equity 2004 - 2008


Segment Information for 2006 to 2008
Until third quarter 2008 the Company sold consumer products to distributors in different geographic markets. Up
until that point the Company identified sale of consumer products as the only business segment. To some extent,
the company has sales outside Norway, mainly to Sweden, and presents the geographical segments as Norway,
Sweden and other countries. The Company’s geographical segments are based on sales to external customer’s
location. The Company is only present in Norway, and thus, no assets or liability is allocated to the other
geographic segments.

Segment reporting has been terminated as of the end third quarter 2008 as the consumer product division and
attached rights and trademarks where sold to Zona Nordic AB. Shortly after the sale, ABT received a claim from a
third party that the product name Zona was an infringement of a registered trademark, resulting in a renegotiation
of the sales agreement with Zona Nordic AB. This affected the result in Sweden negatively.

The segment results for the year ended December 31, 2008 are as follows:

                                                                                            Other
Figures in NOK 1,000                                         Norway           Sweden        countries    Total
Operating revenue                                            697              3 901         185          4 783
Cost of sales                                                (114)            (4 489)       (93)         (4 696)
Gross profit                                                 583              (588)         93           87
Operating expenses                                                                                       (22 766)
Non cash operating expenses (depreciations)                                                              (8 371)
Write-off                                                                                                (18 000)
Operating profit (loss)                                                                                  (49 049)
Finance costs – net                                                                                      (191)
Profit before income tax                                                                                 (49 240)
Income tax expense                                                                                       (13 151)
Profit for the year                                                                                      (36 089)


The segment results for the year ended December 31, 2007 are as follows:

                                                                                            Other
Figures in NOK 1,000                                         Norway           Sweden        countries    Total
Operating revenue                                            2 822            2 428         1 789        7 038
Cost of sales                                                (3 420           (2 027)       (1 463)      (6 909)
Gross profit                                                  (598)           401           326          129
Operating expenses                                                                                       (14 799)




                                                        43
Non cash operating expenses (depreciations)                                                          (5 816)
Operating profit (loss)                                                                              (20 487)
Finance costs – net                                                                                  (308)
Profit before income tax                                                                             (20 795)
Income tax expense                                                                                   (8 821)
Profit for the year                                                                                  (11 974)

 The segment results for the year ended December 31, 2006 are as follows:

                                                                                       Other
 Figures in NOK 1,000                                        Norway       Sweden       countries     Total
 Operating revenue                                           4 322        1 172        2 026         7 520
 Cost of sales                                               (3 008)      (447)        (950)         (4 405)
 Gross profit                                                1 314        724          1 076         3 115
 Operating expenses                                                                                  (6 498)
 Non cash operating expenses (depreciations)                                                         (788)
 Operating profit (loss)                                                                             (4 169)
 Finance costs – net                                                                                 (105)
 Profit before income tax                                                                            (4 274)
 Income tax expense                                                                                  -
 Profit for the year                                                                                 (4 274)

Figure 8.5: Segment reporting 2006 - 2008


Management Discussion and Analysis of the 2006 – 2008 Financial Information

The year ended December 31, 2006
Sales revenue increased to MNOK 7.5 in 2006 following introduction to the Swedish, Danish and Finnish markets
and a contract with Nutri Pharma ASA for sale in Russia. The Company is still in an early stage and has an
extensive research and development focus resulting in a negative EBITDA of MNOK 3.4. Profit before tax was
negative by MNOK 4.3. The equity ratio by year’s end was 48 percent. The equity of the Company was
strengthened with MNOK 9.1 through private placements.

During 2006, the Company was approached by a global manufacturer and marketer of several well-established
cosmetic brands. This company showed a serious interest in Aqua Bio Technology’s technology, and wanted to
test this technology in own products. At that stage, however, the Company was not able to meet this request,
since the production of the patented technology was owned by the now acquired Subsidiary.

Furthermore, the Company developed a new brand – Kilda Skindiver – which is a high-end anti-aging line built on
the value of Scandinavian technology and purity. The Kilda product line underwent clinical dermatological testing
at the University of Linköping, Sweden. The cost of these activities is estimated to approximately MNOK 2.6.

The year ended December 31, 2007
Consolidated revenue from sales of cosmetic products was MNOK 7.0, down from MNOK 7.5 in 2006. The 2007
pre tax result ended negative with MNOK 20.8, compared to a loss of MNOK 4.3 the previous year. The result is
heavily burdened by the expenses stemming from the purchase of 100 % of the shares in Kilda Biolink AS. The
purchase resulted in MNOK 3.9 in increased depreciations on technology. The value of the technology stemming
from Kilda Biolink AS was MNOK 65.8. Further ABT had to write down MNOK 3.5 on inventory, mostly related to
a cancelled contract with Nutri Pharma ASA for sale in Russia.

Net result after tax ended negative at MNOK 12.0 in 2007, compared to a loss of MNOK 4.3 in 2006.

The equity of the Company was strengthened with MNOK 30.9 through two private placements and an initial
public offering. The IPO was done in December and ABT received the contribution in 2008.

Due to the IPO, the private placements and the purchase of Kilda Biolink AS through the issue of the Company´s
shares, ABT´s equity increased from MNOK 11.1 December 31, 2006 to MNOK 97.7 December 31, 2007. This
corresponds to an equity ratio of 94.2 per cent.

The year ended December 31, 2008




                                                       44
Consolidated revenues for 2008 was MNOK 4.8, down from MNOK 7.0 in 2007. Pre tax result in 2008 ended
negative with MNOK 49.2, compared to a loss of MNOK 20.8 the previous year.

Net result after tax ended negative at MNOK 36.1 in 2008, compared to a loss of MNOK 12.0 in 2007.

The consolidated income statement is impacted by amortization of intangible assets of MNOK 18.0. The revenues
and result of the Company also reflect failing sales of consumer products in the first three quarters and the
discontinuation and sales of the consumer product division and thereto attached trademarks and rights in the
fourth quarter. Losses related to the sales of cosmetic products with attached trademarks and rights in fourth
quarter totals MNOK 9.3, see section 8.8.

Effect of cost cutting measures and downscaling undertaken in connection with relocation of the Company from
Sandefjord to Bergen will first materialize in 2009.

December 31, 2008 the balance in the Company was MNOK 75.5 with an equity ratio of 81 %. The Company has
no interest bearing debt. As part of an evaluation of the Company’s assets a write-off of MNOK 18.0 of the value
of the developed technology Zonase has been done.


8.4         Significant Changes in the Company’s Financial or Trading Position since
            December 31, 2008
The company raised NOK 8 306 893 in cash in the Private Placement as described in Chapter 4.

In connection with the Private Placement the Company initiated debt negotiations with all creditor’s possessing
claims greater than NOK 10 000. The negotiations were successfully concluded and NOK 2 139 847 of debt was
converted to equity through set-off of debt in the private placement. Furthermore it resulted in the conversion of
MNOK 0.996 to non-interest bearing debt with two-year maturity and cash down payment of MNOK 2.224. This
includes termination of contract obligations. A total of MNOK 2.93 of long-term contract obligations has been
written-off, whereof 78 % connected to lease of premises.

Apart from the Private Placement and debt negotiation there have been no notable changes to the Company’s
capital resource position.


8.5         Trends
The Company experiences significant international interest for its enzyme technology from potential customers.
This may be linked to the growing demand for new ingredients and technologies based on natural and marine
ingredients, while demand for traditional mammal derived ingredients declines.

The overall, long-term trend shows an increasing demand for cosmetic products all over the industrialized world.

Another important trend is linked to the increasing regulatory requirements for documentation of safety and
efficacy of cosmetic and derma-cosmetic ingredients and products.


8.6         Investments
The table below shows Aqua Bio Group’s principal investments, including research and development
investments, for the last three financial years, investments in progress and future investments on which
commitments already have been made. (Unaudited)

                                                                Amount      Financing
Year               Investment                                (NOK 1,000)
                   Capitalized safety documentation,
                   stability and dosage studies, and                        Government Grants, loans from
                   clinical product documentation,                          related parties, share issue proceeds,
2006               packaging and marketing material                 5 276   sales
                   Capitalized clinical documentation
2007               and market research.                            3 611    Share issue proceeds, sales
2007               Acquired Aqua Bio Technology AS                70 000    Issue of 1,550,000 own shares
2007-2008          Settlement Zonase AS                            3 500    Share issue proceeds, sales
                   Capitalized R&D                                 2 000    Share issue proceeds, sales

Figure 8.7: Investments (Unaudited)




                                                        45
No significant investment is currently on-going or planned.


8.7         Information on Holdings
Except for the ownership in Kilda Biolink AS, the Company does not have any ownership interests or investments,
which are likely to have a significant effect on the assessment of the Company’s own assets and liabilities,
financial position or profit and losses.


8.8         Capital Resources
Capitalization and Indebtedness
The table below shows Aqua Bio Group’s unaudited capitalization and indebtedness based on audited
consolidated financial statements for December 31, 2008 (in NOK thousands).

Figures in NOK 1,000 (audited)                                                              December 31, 2008

Current debt
Guaranteed
Secured
Unguaranteed / unsecured                                                                                  4 160
Total current debt                                                                                        4 160

Non-current debt
Guaranteed
Secured
Unguaranteed / unsecured                                                                                  9 903
Total non-current debt                                                                                    9 903

Total indebtedness (A)                                                                                   14 062

Ordinary shares                                                                                           3 849
Share premium                                                                                          111 332
Retained earnings                                                                                      (53 789)
Shareholders’ equity (B)                                                                                 61 391

Total capitalization (A+B)                                                                               75 454

Cash and cash equivalents                                                                                      147
Trading securities
Liquidity (C)                                                                                                  147

Current financial receivables (D)                                                                         3 370

Current bank debt                                                                                             -
Current portion of non-current debt                                                                           -
Other current financial debt                                                                              4 160
Current financial debt (E)                                                                                4 160

Net current financial indebtedness (C + D – E) (F)                                                         (643)

Non-current bank loans
Bonds issued
Other non-current loans                                                                                   3 000
Non-current financial debt (G)                                                                            3 000

Net financial indebtedness (F-G)                                                                         (3 643)

Figure 8.8: Capitalization and indebtedness (unaudited)

This table above should be read together with the Company’s yearly financial statements, see section 8.3 and
appendices 2-4.




                                                        46
The Company’s unaudited consolidated capitalization as per December 31, 2008 was MNOK 75.5. Unaudited
consolidated indebtedness was MNOK 14.1 and net unaudited consolidated financial indebtedness was negative
MNOK 3.6.

Subsequent to December 31, 2008 the Company has been refinanced through the Private Placement improving
its equity position and reducing its debt as described in section 4.

Apart from the Private Placement and debt negotiation there have been no notable changes to the Company’s
capital resource position.

The Company aims to maintain an equity ratio in the Company satisfactory in light of the Company’s goals,
strategy and risk profile.

Implications from sale of Consumer product division to Zona Nordic AB
An agreement was concluded in October 2007 with Zona Nordic AB for the sales of the Company’s consumer
product division with related trademarks and rights. Shortly following the sale the Company received a claim from
a third party stating breach of a registered trademark.

As a consequence the sales agreement with Zona Nordic AB was renegotiated and final terms were signed
January 15, 2009.

Losses pertaining to the sale amount to:
Sales trademarks                                                                                        1 166 864
Accounting value trademarks                                                                             5 136 399
Compensation payable in goods                                                                           3 080 000
Total accounting loss                                                                                   9 383 263

Compensation payable in goods of MNOK 3.1 has been reported as a long-term obligation. In addition to the loss
of MNOK 9.4 there will be a repayment of down payments made equalling MNOK 3.0 reported as long-term
loans. The loan is non-interest bearing for three years and terms for down payment shall be agreed by January
15, 2012.

Description of cash flows
The Company’s consolidated cash flows in the period 2006 to 2008 can be summarized as follows:

            Cash flow statement
                                                            01.01-31.12   01.01-31.12    01.01-31.12
                                                                 2008          2007            2006
                                                                 IFRS          IFRS            IFRS
            (NOK '000)                                         Audited       Audited         Audited

            Net cash flow from operations                     (13 521)       (12 386)         (9 529)

            Net cash flow from investment activities           (2 044)         (1 945)        (5 276)

            Net cash flow from financing activities             14 345         17 260         12 554

            Net change in cash in the period                   (1 220)          2 928         (2 250)

            Cash opening balance                                 1 367         (1 561)           689

            Cash closing balance                                  147           1 367         (1 561)


The cash outflow from operating activities in 2008 amounted to MNOK 13.5, compared to MNOK 12.4 in 2007.
Cash outflow items in 2008 mainly relate to sales of the consumer product line as explained above, while cash
outflows in 2007 also stemmed from financial and structuring costs in relation to the acquisition, as well as
product and marketing costs.




                                                       47
Cash flow from financing activities was MNOK 14.3 during 2008, with MNOK 9.95 being proceeds from a Private
Placement completed January 2008. Comparable figures for 2007 were MNOK 17.3, of which MNOK 19.0 where
raised from issuance of shares.

As of December 31, 2008, cash and cash equivalents amounted to MNOK 0.1, compared to MNOK 1.4 as of
December 31, 2007.


No arrangements or agreements exist that impose any restrictions on the use of capital resources that have
materially affected, or could materially affect, directly or indirectly, the Company’s operations.


8.9         Working Capital Statement
In the opinion of the Company, the working capital is sufficient for the Company’s present requirements.


8.10        Funding and Treasury Policies and Objectives
The Board of Directors together with the Chief Executive Officer shall ensure that the Company has adequate,
though not excessive cash resources, and when applicable borrowing arrangements and overdraft or standby
facilities, to enable it at all times to have the level of funds available to it which are necessary for the
achievements of its business/service objectives.

The Company has established accounting and internal control systems to ensure that the cash resources, or
when applicable loan facility funds, are appropriated according to the budget and allowed use set by the Board of
Directors, in accordance with laws, regulations and auditing standard and practices generally accepted in Norway.


8.11        Statutory Auditor
The Company’s auditor since its inception has been Ernst & Young AS. The address of Ernst & Young is Oslo
Atrium, Postboks 20, N-0051 Oslo, Norway. Ernst & Young is a member of the Norwegian Institute of Public
Accountants.

Ernst & Young has audited the Company’s financial annual statements for 2006, 2007 and 2008. The audit
opinions for these years have been issued without qualifications.




                                                       48
9             SHARES AND SHARE CAPITAL
9.1           General
Under Norwegian law, limited liability companies are divided into two categories, private and public companies.
Only the shares of public companies may be traded on a stock exchange or other regulated market places. Aqua
Bio Technology is a public limited liability company (ASA), subject to provisions of the Norwegian Public Limited
Companies Act.


9.2           Share Capital
The Company’s share capital as of the date of this Prospectus is NOK 14,295,194.60, consisting of 71,475,973
Shares of one class only, each with a par value of NOK 0.20. The Company’s share capital is fully paid up. The
Company’s share register is operated through the VPS. The Company’s registrar is DnB NOR Bank ASA. The
securities number (ISIN number) for the Company’s Shares is NO0010307135.


9.3           Development of Share Capital
The following table sets forth the development of the Company’s share capital since its incorporation on April 10,
2004:

Month/         Type of change                   Change in       No. of Shares            Share     Nominal      Issue
Year                                            number of      subsequent to            capital       Value      price
                                                    Shares        the change            (NOK)        (NOK)     (NOK)
Apr 2004       Incorporation                     1 000 000          1 000 000          100 000         0.10       0.10
Oct 2005       Private placement                   310 000          1 310 000          131 000         0.10     20.00
Apr 2006       Private placement                   190 000          1 500 000          150 000         0.10     48.00
Feb 2007       Private placement                    50 000          1 550 000          155 000         0.10     48.00
May 2007       Share capital write-up                    -          1 550 000        1 550 000         1.00        n/a
Jun 2007       Share issue                       1 550 000          3 100 000        3 100 000         1.00       1.00
Sep 2007       Private placement                   147 070          3 247 070        3 247 070         1.00     30.00
               Conversion of debt to
Sep 2007       equity                              40 000           3 287 070     3 287 070             1.00    30.00
Sep 2007       Share split                     13 148 280          16 435 350     3 287 070             0.20      n/a
Nov 2007       Private placement                1 569 388          18 004 738 3 600 947,60              0.20     9.00
Dec 2007       Public issue                     1 238 000          19 242 738 3 848 547.60              0.20     9.00
April 2009     Private placement               52 233 235          71 475 973 14 295 194.60             0.20     0.20

Figure 9.1: Development of share capital


9.4           Outstanding Authorizations
New Share Issues
At the extraordinary general meeting of the Company on April 16, 2009 it was resolved to authorize the Board of
Directors, on one or several occasions, to increase the share capital by a maximum of NOK 5 718 076 through
issue of new Shares. This authorization together with the authorizations for issuance of shares in the Options
program, see below, constitute authorizations for issuance of 50 % of the Company’s share capital after the
Private Placement in new shares. According to the authorization, the Board of Directors is authorized to set aside
the existing shareholders pre-emptive rights.

The authorization to increase the Company’s share capital is valid 2 years from its registration in the Register of
Business Enterprises. The purpose of the authorization is to give the Board financial capability to complete
transactions which may contribute to strengthen the Company’s commercial position, equity or financial stability.
“The Company’s board is issued an authorization to perform capital increases according to the Public Limited
Liability Act § 10-14 on the following terms:

      1.   The share capital can be increased, on one or several occasions, by up to a maximum of NOK 5 718 076
           in total;
      2.   The authorization is valid two years from the date of registration in the Register of Business Enterprises;
      3.   The existing shareholders’ preferential right according to the Public Limited Liability Act § 10-4 can be
           waived;
      4.   The authorization also covers share capital increases against other contributions than cash and gives a
           right to incur obligations on behalf of the Company according to the Public Limited Liability Act § 10-2;




                                                          49
      5.   The board may perform the changes in the Company’s articles of association required due to capital
           increases based upon this authorization.”

Options and Incentive Programs
At the extraordinary general meeting of the Company on April 16, 2009 it was resolved to authorize the Board of
Directors to establish an option program pursuant to which shares equaling up to 10 % of the Company’s
outstanding Shares after the Private Placement may be issued to employees and board members of the Aqua Bio
Group. The following resolution was passed:

“The Company’s board is issued an authorization to perform capital increases according to the Public Limited
Liability Act § 10-14 on the following terms:

      1.   The share capital can be increased, on one or several occasions, by up to a maximum of NOK 1 429 519
           in total;
      2.   The authorization is valid two years from the date of registration in the Register of Business Enterprises;
      3.   The existing shareholders’ preferential right according to the Public Limited Liability Act § 10-4 can be
           waived;
      4.   The authorization does not cover share capital increases against other contributions than cash nor does
           it give a right to incur obligations on behalf of the Company;
      5.   The authorization can only be used to issue shares under the Company’s option program;
      6.   The authorization does not cover decision about mergers;
      7.   The board may perform the changes in the Company’s articles of association required due to capital
           increases based upon this authorization.”

Outstanding Options

Option holder                  Number of options       Exercise price      Exercise period
Ståle Bergum                   150 000                 NOK 9.90            50% - Jan. 1, 2010 to Dec. 31, 2011
                                                                           50% - Jan. 1, 2011 to Dec. 31, 2011
Dag Oppen-Berntsen             150 000                 NOK 9.90            50% - Jan. 1, 2010 to Jan. 1, 2012
                                                                           50% - Jan. 1, 2011 to Jan. 1, 2012
Kjell Bakke                    103 333                 NOK 7.20            May 8, 2007 to May 14, 2012
Thor Arne Talseth              1 500 000               NOK 0.20            Until August 1, 2010
Thor Arne Talseth              1 500 000               NOK 0.25            Until August 1, 2011

Figure 9.2: Outstanding options


9.5           Own Shares
The Company does not own Shares in the Company. The Board of Directors holds no authorization to acquire
own Shares.


9.6           Ownership Structure
As of May 7, 2009 the Company had 193 registered shareholders, of whom 11 were non-Norwegian. The
Company’s 20 largest shareholders registered in the VPS are as set out in the table:

                                                                                                  In percent of total
Name                                                                  Number of shares
                                                                                                       share capital
BOLAKS AS                                                                       3 624 750                    18.84 %
ZYM HOLDING AS                                                                  2 543 468                    13.22 %
ADLER CAPITAL AS V/EINAR VANGSNES                                               1 747 757                     9.08 %
BLUEFIELD AS c/o Katalysator AS                                                 1 121 725                     5.83 %
PECUNIA FORVALTNING                                                             1 000 000                     5.20 %
A-ZYM AS                                                                          930 000                     4.83 %
MOLVÆR IVAR ARVID                                                                 801 665                     4.17 %
T-ZYM AS                                                                          736 250                     3.83 %
KATALYSATOR AS                                                                    480 362                     2.50 %
SVENSKA HANDELSBANKE C/O HANDELSBANKEN AS                                         474 000                     2.46 %
AQUAZYME TECHNOLOGY                                                               387 888                     2.02 %
MP PENSJON                                                                        330 000                     1.71 %




                                                          50
BARSKE GLEDER AS                                                                 250 000                      1.30 %
TENVIK DIAGNOSTIKK O                                                             250 000                      1.30 %
TANNLEGE PER HAGEN A                                                             248 855                      1.29 %
PROTEOZYM TECHNOLOGY                                                             246 532                      1.28 %
GULLAS AS                                                                        241 000                      1.25 %
KROGSRUD INVEST AS Att.: Nils Krogsrud                                           175 000                      0.91 %
NORDEA BANK NORGE AS SECURITIES OPERATION                                        169 800                      0.88 %
OSLO OG FOLLO KJEVEO Espen Dahl                                                  166 200                      0.86 %

Others                                                                         3 317 486                    17.24 %
Total                                                                         19 242 738                   100.00 %

Figure 9.3: The 20 largest shareholders


9.7           Major Shareholders and Noticeable Shareholdings
The following shareholders will own more than 5 percent of the issued share capital in the Company after the
Private Placement:

•     Bluefield AS is controlled by Kjetil Dahl and holds 6 371 725 shares in the Company, equaling 8.91 percent of
      the total share capital.
•     Pacific Andes International Holdings (BVI) Limited is controlled by Dennis Chan and holds 6 330 000 shares
      in the Company, equaling 8.86 percent of the total share capital.
•     Bolaks AS is controlled by the Holmefjord family and holds 4 832 330 shares in the Company, equaling 6.76
      percent of the total share capital. Bolaks is the supplier of fish larvae from which the Company’s main
      product, Zonase, is being manufactured.
•     Adler Capital AS is controlled by Einar Vangsnes and holds 4 585 257 shares in the Company, equaling 6.42
      percent of the total share capital.
•     Kjeld Rimberg holds 4 466 725 shares in the Company, equaling 6.25 percent of the total share capital
      through Kjeld Rimberg & Co AS and Kjeld Rimberg Consulting AS.
•     Thor Arne Talseth controls Ignite AS and owns 3 983 644 shares in the Company, equaling 5.57 % of the
      total share capital.
•     Pecunia Forvaltning AS is controlled by Peter Neslein and holds 3 714 000 shares in the Company, equaling
      5.20 percent of the total share capital.
All Shares and shareholders have equal rights, including voting rights see section 10.6.

To the knowledge of the Board of Directors, no shareholder or group of shareholders has direct or indirect control
of the Company, and there are to the Board of Directors’ knowledge no arrangements which may at a subsequent
date result in a change of control of the Company. Nor does the Board of Directors know of shareholder
agreements or other agreements between shareholders acting as a group.

As far as the Company is aware of, there is no other natural or legal person, which directly or indirectly has a
shareholding in the Company which is noticeable under Norwegian Law.


9.8           Dividend Policy
The Company intends to follow a dividend policy favourable to the shareholders. The amount of any dividends to
be distributed will be dependent on the Company’s investment requirements and rate of growth as well as the
general development and financing requirements of the Company.

    in NOK                                          2008                          2007                             2006
    Dividend per Share                                 0                             0                                0

Figure 9.4: Dividend distributions 2006 - 2008




                                                         51
9.9         Articles of Association
The objects and purposes of the Company are to develop and market dermatological, cosmetic and other health
care products by utilizing new technology and research results. This shall be enabled through own R&D and
through cooperation with domestic as well as international institutions. Reference is made to section 2 of the
Articles of Association, attached as Appendix 1 to this Prospectus.

The Articles of Association of the Company contain no provisions restricting foreign ownership of Shares. There
are no limitations under Norwegian law on the rights of non-residents or foreign owners to hold or vote the
Shares.


9.10        Statutory Auditor
The Company’s auditor is Ernst & Young AS, state authorized public accountant, who has acted as the
Company’s auditor since inception.

Ernst & Young AS
Oslo Atrium
Postboks 20
0051 Oslo

Ernst & Young AS is a member of the Norwegian Institute of Public Accountants (“Den norske Revisorforening”).


9.11        Related Party Transactions
During the period covered by the historical financial information the Company has entered the following related
party transactions:

Year       Related Party                         Description of Transaction                     Amount
                                                 Liquidity loan from Bluefield AS to Aqua
2006       Bluefield AS                          Bio Technology ASA (no longer in force)        NOK 1,250,000
                                                 Subordinated loan from Myrvollveien 3B         NOK 650,000
                                                 AS to Aqua Bio Technology ASA (no              +5% interest per
2006       Myrvollveien 3B AS                    longer in force)                               annum
                                                 Subordinated loan from Jarl Kjelstadli to      NOK 150,000
                                                 Aqua Bio Technology ASA (no longer in          +5% interest per
2006       Jarl Kjelstadli                       force)                                         annum
2007-                                            Part-time consultancy with Aqua Bio            NOK 50,000 per
2008       Kjell H. Bakke, previous chairman     Technology ASA (no longer in force)            month
                                                 Share purchase and sale agreement with
                                                 Kilda Biolink AS regarding 100% of the
2007       AS Bolaks and Zym Holding AS          shares in Aquazym Technology AS                NOK 1
                                                 Exclusive, royalty-free license to use Kilda
                                                 Biolink’s Zonase patents on all fields
                                                 except cosmetics and dermatological
2007       Aquazym Technology AS                 applications                                   -
2008-      Kjeld Rimberg Consulting AS,          Part-time consultancy with Aqua Bio
2009       (Kjeld Rimberg, Chairman)             Technology ASA and liquidity loan              NOK 540,345
2008-      Bluefield AS (Kjetil Dahl, previous   Part-time consultancy with Aqua Bio
2009       board member)                         Technology ASA and liquidity loan              NOK 323,000
2008-      Valutacorp AS, (Tone Bjørnov,         Part-time consultancy with Aqua Bio
2009       board member)                         Technology ASA                                 NOK 62,500
2008-      Kauna Management AS, (Anne            Part-time consultancy with Aqua Bio
2009       Sofie Utne, board member)             Technology ASA                                 NOK 71,500
           AS Bolaks                             Supplier of raw material                       -

Figure 9.5: Related Party Transactions

Business Service Agreements
The Company has on several occasions purchased raw material in form of hatching liquid from Bolaks AS.

The Company also hires Arild Roar Rasmussen in the role as CEO from Bolaks AS as described in section 7.4.

Bolaks is a shareholder in the Company.




                                                       52
Option Agreements
Except for the share option agreement with the Chairman Thor Arne Talseth (described in section 7.3), no option
agreements exist with related parties.

Consultancy Agreements
In 2008 the Company entered into consultancy agreements with its board members, who have been instrumental
in the reorganization and refinancing of the Company. By electing Thor Arne Talseth as new Chairman and COO
this task has reached is completion and agreements are terminated. The board members remuneration in excess
of their board member fees are:

                                                                                   Total remuneration
Name                     Position                     Agreement Period             (inc. VAT)
Kjeld Rimberg            Board member (previous       August 2008-March 2009       NOK 393,750
                         chairman)
Kjetil Dahl              Previous board member        August 2008-March 2009       NOK 250,000
Anne-Sofie Utne          Board member                 August 2008-March 2009       NOK 71,500
Tone Bjørnov             Board member                 August 2008-March 2009       NOK 62,500

Figure 9.6: Consultancy remuneration board members 2008-2009

The Company entered into a consultancy agreement with Mr. Kjell Bakke during his period as Chairman. Mr.
Bakke worked approximately 50 percent for the Company and received a monthly remuneration of NOK 50,000.
The agreement has been terminated.

Business Transactions
Transfer of license rights to Aquazym Technology AS
Kilda Biolink AS has entered into an agreement with Aquazym Technology AS dated April 7, 2007, after which
Aquazym Technology AS has been granted the exclusive license to use the patents regarding Zonase on all fields
except for cosmetic and dermatological applications. Aquazym Technology AS shall not pay any compensation
for this exclusive right.

The above-mentioned transactions were based on the principle of “arms length” pricing.




                                                      53
10          SHAREHOLDER MATTERS
The following description includes a brief description of certain provisions contained in the Company’s Articles of
Association, as they are in effect at the date of this Prospectus and a brief description of certain applicable
Norwegian law, hereunder the Public Limited Companies Act and the Securities Trading Act. The summary does
not purport to be complete and is qualified in its entirety by the Company’s Articles of Association and Norwegian
law. Any change in the Articles of Association is subject to approval by a general meeting of the Company’s
shareholders.


10.1        Transfer of Shares
According to the Company’s Articles of Association, there are no general limitations on transfer of the Company’s
Shares.


10.2        Disclosure Requirements
Under the applicable rules of the Norwegian Securities Act, a person, close associated or consolidated group
acting in concert that acquires shares, options for shares or other rights to shares resulting in its beneficial
ownership, directly or indirectly, in the aggregate reaching, exceeding or falling below the respective thresholds of
5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 and 90% of the share capital or the voting rights in the Company has an
obligation under Norwegian law to notify Oslo Børs immediately. The same applies to disposal of shares (but not
options or other rights to shares) resulting in a beneficial ownership, directly or indirectly, in the aggregate
reaching, exceeding or falling below said thresholds.

Equivalent to shares and/or rights to shares are voting rights that may be exercised with a basis in a proxy not
containing instructions from the original shareholder. A change in ownership due to other circumstances (i.e. other
than acquisition or disposal) will also trigger the notification obligations when the said thresholds are passed.

Equivalent to shares and/or rights to shares are voting rights that may be exercised with a basis in a proxy not
containing instructions from the shareholder, and borrowing of shares and return of shares to the lender is
regarded as acquisition and disposal.

10.3        Mandatory Filing Requirements
The Norwegian Competition Act stipulates a mandatory filing requirement for certain mergers and transactions
involving acquisition of control of another undertaking.

All mergers and transactions involving acquisition of control must be notified to the NCA if the undertakings
involved in the transaction have a combined annual turnover in Norway of NOK 50 million or more. However, if
only one of the undertakings involved in the transaction has an annual turnover in Norway exceeding NOK 20
million, the transaction need not be notified.

Notwithstanding the above, the filing requirements under the Norwegian Competition Act do not apply to
concentrations that are within the turnover thresholds of the EC Merger Regulation or equivalent thresholds in the
EEA Agreement. Accordingly, the principle of one-stop-merger control applies.

As of 1 July 2008 there is no longer any deadline for filing, due to amendments to the Competition Act As long as
the transaction is not implemented, it is left to the parties’ discretion when to submit the initial Standardised
Notification. However, the Competition Act allows for voluntary filing at an earlier stage, as long as the content
requirements can be fulfilled.

The obligation to notify the transaction is imposed on the parties to the merger or on the acquirer(s) of an
undertaking. The mandatory filing requirement under the Competition Act imposes an obligation to submit a
simplified notification. If the NCA finds reason to consider the transaction more closely, the NCA may require that
77 the parties to the merger/the acquirer(s) submit(s) a complete notification. The NCA must make such a
requirement within 15 working days after they have received the simplified notification. If this is not done, the NCA
cannot intervene against the transaction after this deadline has expired. The parties may also voluntarily submit a
complete notification without having received instructions from the NCA.

Following amendments to the Competition Act effective from 1 July 2008, automatic suspension applies to all
concentrations that are subject to notification to the NCA. If the transaction is not cleared during phase 1, the
suspension will automatically be extended until 25 working days after the submission of a Complete Notification.
After this date, there is no longer any automatic suspension in effect, but the NCA will extend the suspension or
reinforce it if the NCA suspects that the parties are considering implementing the transaction before clearance is
obtained. The same applies if a complete notification is submitted voluntarily. The suspension period lasts for 25




                                                         54
working days calculated from the time the NCA has received the complete notification. It is within this time limit
that the NCA must decide whether to investigate the transaction further. If the NCA decides to investigate the
transaction further, i.e. beyond the above mentioned 25 working days period, the NCA must provide a reasoned
draft decision of intervention no later than 70 working days as from the receipt of the complete notification. The
parties will then have 15 working days to submit their comments to the draft decision. The NCA must reach a final
decision no later than 15 working days after the receipt of such comments. If the parties have submitted a
proposal for commitments, they can request that an additional 25 working days are added to NCA's deadline to
reach a final decision.

10.4         Mandatory Bid Requirement
Pursuant to Norwegian Securities Trading Act chapter 6, any person, entity or a consolidated group that becomes
the owner of shares representing more than 1/3 of the voting rights of a Norwegian company whose shares are
quoted on Oslo Børs, is obliged to make an unconditional general offer without undue delay and at the latest four
weeks after the mandatory offer obligation was triggered for the purchase of the remaining shares in the
company. This obligation is repeated when the purchaser becomes the owner of shares representing more than
40% and 50% of the voting rights. When a mandatory offer obligation is activated, the person subject to such
obligation shall immediately notify Oslo Børs and the company accordingly. The offer and the offer document
required are subject to an approval by Oslo Børs before submission of the offer to the shareholders is made or
published.

The offer price per share must be at least as high as the highest payment the offerer has made or agreed in the
period six months prior to the date the mandatory offer thresholds were exceeded. However, if it is clear that the
market price was higher when the mandatory offer obligation was triggered, such market price shall be made as
an offer. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of
the mandatory offer period, the acquirer is obliged to restate his bid at such higher price. A mandatory offer must
be in cash. An offer may nonetheless give the shareholders the right to accept an alternative to cash.

In case of failure to make a mandatory offer within four weeks, the obligation ceases to apply if sale is
undertaken, i.e. by reducing the ownership to a level below the mandatory offer thresholds. Otherwise, Oslo Børs
may force the acquirer to sell the shares exceeding the mandatory offer limit by public auction.

Moreover, an acquirer who fails to make an offer, may not, as long as the mandatory obligation remain in force,
exercise rights in the company, such as voting on the shareholders meeting. However, the shareholder may
exercise the right to dividend and pre-emption rights in the event of a share capital increase, without the consent
of a majority of the remaining shareholders. If the shareholder neglects his duties to make a mandatory offer, Oslo
Børs may impose a cumulative daily fine which runs until the circumstance has been rectified.

10.5         Compulsory Acquisition
Pursuant to the Norwegian Public Limited Companies Act, if a shareholder, directly or indirectly or via
subsidiaries, acquires shares representing more than 90 percent of the total issued shares in the Company or
voting rights attached to such shares, then such majority shareholders would have the right (and each remaining
minority shareholder of the Company would have the right to require such majority shareholder) to effect a
compulsory acquisition for cash of any shares not already owned by such majority shareholder. Such compulsory
acquisition would imply that the majority shareholder becomes the owner of all shares held by minority
shareholders with immediate effect.

Upon effecting the compulsory acquisition, the majority shareholder shall offer the minority shareholders a specific
price per share, the determination of which price would be at the discretion of the majority shareholder.

Should any minority shareholder not accept the offered price, such minority shareholder may, within specified
deadline not to be of less than two months’ duration, object to the pricing being offered. Absent such request or
other objection to the price being offered, the minority shareholders would be deemed to have accepted the
offered price after the expiry of the two months deadline. If an objection is made, and absent amicable settlement,
each of the majority shareholders and the objecting minority shareholders may request that the price be set by
Norwegian courts. According to the Norwegian Supreme Court the price shall reflect the real (actual) value of the
shares, i.e. that the price shall be based on the underlying values in the company taking into consideration that all
shares of the same class have equal value. Which valuation method (substance value, return value, stock market
price etc.) are best suited to determine the underlying value, depends on a concrete evaluation.

The cost of such court procedure would, as a general rule, be for the account of the majority shareholder, and the
courts would have full discretion in respect of the valuation of the shares as per the effectuation of the compulsory
acquisition.




                                                          55
10.6         Voting Rights
Each share in the Company carries one vote. Each share held by a major shareholder carries the same voting
right as each share held by any other shareholder.

As a general rule, resolutions that shareholders are entitled to make pursuant to Norwegian Securities Act or the
Company's Articles of Association require a simple majority of the votes cast. In the case of election of directors to
the Board of Directors, the persons who obtain the most votes cast are deemed elected to fill the positions up for
election. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential
rights in connection with any share issue, to approve a merger or de-merger, to amend the Company's Articles of
Association or to authorize an increase or reduction in the share capital, must receive the approval of at least two-
thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a
shareholders' meeting. Norwegian law further requires that certain decisions, which have the effect of
substantially altering the rights and preferences of any shares or class of shares, receive the approval of the
holders of such shares or class of shares as well as the majority required for amendments to the Company's
Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend payments or
other rights to the assets of the Company or (ii) restrict the transferability of the shares, require a majority vote of
at least 90 percent of the share capital represented at the general meeting in question as well as the majority
required for amendments to the Company's Articles of Association. Certain types of changes in the rights of
shareholders require the consent of all shareholders affected thereby as well as the majority required for
amendments to the Company's Articles of Association.

In general, in order to be entitled to vote, a shareholder must be registered as the beneficial owner of Shares in
the share register kept by the VPS. Beneficial owners of Shares that are registered in the name of a nominee are
generally not entitled to vote under Norwegian law, nor are any persons who are designated in the register as
holding such Shares as nominees. Readers should note that there are varying opinions as to the interpretation of
Norwegian law in respect of the right to vote nominee-registered shares.


10.7         General Meetings of Shareholders
Under Norwegian law, a company’s shareholders are to exercise supreme authority in the company through the
general meeting. A shareholder may attend the general meeting either in person or by proxy. Although Norwegian
law does not currently require the Company to send proxy forms to its shareholders for general meetings, the
Company plans to include a proxy form with notices of general meetings.

In accordance with Norwegian law, the annual general meeting of the Company’s shareholders is required to be
held each year on or prior to June 30. The following items must be transacted and decided at the annual general
meeting:
     • approval of the annual accounts and annual report, including the distribution of any dividend; and
     • any other business to be transacted at the general meeting by law or in accordance with the Company’s
         articles of association.

Norwegian law requires that written notice of general meetings are sent to all shareholders whose addresses are
known at least two weeks prior to the date of the meeting, unless a company’s articles of association stipulate a
longer period. The Articles of Association do not contain provisions governing the manner in which annual general
meetings are called. The notice must set forth the time and date of the meeting and specify the agenda of the
meeting. It must also name the person appointed by the Board to open the meeting. All shareholders who are
registered in the register of shareholders maintained by the VPS as of the date of the general meeting, or have
otherwise reported and proved an acquisition of Shares, are entitled to admission without any requirement for
preregistration.

A shareholder is entitled to have an issue discussed at a general meeting if such shareholder provides the Board
with notice of the issue so that it can be included in the written notice of the general meeting. In addition to the
annual general meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the
Company’s Board. An extraordinary general meeting must also be convened for the consideration of specific
matters at the written request of the Company’s auditors or shareholders representing a total of at least 5% of the
share capital.

10.8         Additional Share Issuances and Preferential Rights
All issuances of Shares by the Company, including bonus issues, require an amendment to the Articles of
Association, which requires the same vote as other amendments to the Articles of Association. Furthermore,
under Norwegian law, the Company's shareholders have a preferential right to subscribe for issues of new shares
by the Company. The preferential rights to subscribe in an issue may be waived by a resolution in a general
meeting by the same vote required to approve amendments to the Articles of Association. A waiver of the
shareholders' preferential rights in respect of bonus issues requires the approval of all outstanding shares,
irrespective of class.




                                                          56
Under Norwegian law, bonus issues may be distributed, subject to shareholder approval, by transfer from the
Company's free equity or from its share premium reserve. Such bonus issues may be effectuated either by
issuing shares or by increasing the par value of the shares outstanding.


10.9         Dividends
Under Norwegian law, no interim dividends may be paid in respect of a financial period as to which audited
financial statements have not been approved by the annual general meeting of shareholders, and any proposal to
pay a dividend must be recommended or accepted by the directors and approved by the shareholders at a
general meeting. The shareholders may vote to reduce (but not to increase) the dividends proposed by the
directors.

Dividends in cash or in kind are payable only out of (i) the annual profit according to the adopted income
statement for the last financial year, (ii) retained profit from previous years, and (iii) distributable reserves, after
deduction of (a) any uncovered losses, (b) the book value of research and development, (c) goodwill, (d) net
deferred tax assets recorded in the balance sheet for the last financial year, (e) the aggregate value of any
treasury shares the Company has purchased or been granted security over during the preceding financial years,
(f) any credit or security given pursuant to Sections 8-7 to 8-9 of the Public Limited Companies Act, and provided
always that such distribution is compatible with good and prudent business practice with due regard to any losses
which may have occurred after the last balance sheet date or which may be expected to occur. The Company
cannot distribute any dividends if the equity, according to the balance sheet, amounts to less than ten per cent of
the total assets, according to the balance sheet without following a creditor notification procedure as required for
reducing the share capital.

Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not
subject to prior government approval except for the physical transfer of payments in currency, which is restricted
to licensed banks. Consequently, a non-Norwegian resident may receive dividend payments without Norwegian
exchange control consent if such payment is made only through a licensed bank.

The Company’s Board will consider the amount of dividend (if any) to recommend for approval by the Company’s
shareholders, on an annual basis, based upon the earnings of the Company for the years just ended and the
financial situation of the Company at the relevant point in time. Hence, the shareholders do not have a right to
share in the Company’s profits by way of dividends. All shareholders that are shareholders at the time of the
general meeting making its resolution are entitled to dividend. There is no time limit under which the individual
shareholders entitlement to a declared dividend lapses.


10.10        Change of the Rights of Holders of Shares
The Company’s Articles of Association do not contain any special regulations for changing the rights of holders of
the Company’s Shares. Subject to specific requirements set out in the Public Limited Companies Act, the general
meeting may adopt a resolution to change rights attached on the Company’s Shares. Such resolution requires an
amendment to the Articles of Association, which requires the same vote as other amendments to the Articles of
Association. In addition, stricter majority requirements may apply depending on the manner in which the change
of rights to be carried out.


10.11        Redemption and Conversion Rights
There are no redemption rights or conversion rights attached to the Company’s Shares.


10.12        Rights on Liquidation
Under Norwegian law, the Company may be liquidated by a resolution in a general meeting of the Company
passed by a two-thirds majority of the aggregate votes cast as well as two thirds of the aggregate share capital
represented at such meeting. The Shares rank pari passu in the event of a return on capital by the Company
upon a liquidation or otherwise.


10.13        Reports to Shareholders
The Company publishes annual and interim reports that include financial statements. The consolidated financial
statements are published in accordance with the International Financial Reporting Standards, IFRS, as issued by
the International Accounting Standards Board.




                                                          57
10.14      Notification and Publication Requirements
The Company provides its shareholders, Oslo Axess and the market as a whole timely and accurate information.
Notices are published through Oslo Axess’ information system and on the Company’s Internet site.




                                                     58
11          TAX INFORMATION
11.1        General
This subsection presents a brief outline of certain tax aspects related to purchase, holding and disposal of shares
in the Company. The presentation is based on Norwegian tax regulations in force as of the date of this
Prospectus and describes the tax situation for Norwegian shareholders (shareholders with Norwegian tax
domicile) and withholding tax for non-Norwegian shareholders (shareholders not having Norwegian tax domicile).

The presentation does not include any information with respect to taxation in any other jurisdiction than Norway,
and the presentation only focuses on the shareholder categories explicitly mentioned below. Hence the
presentation does inter alia not exhaustively cover the tax situation for non-Norwegian shareholders holding
shares in the Company through a Norwegian permanent establishment. Further, special rules (exit taxation),
which are not mentioned below, may apply to shareholders that have moved or will move out of Norway.

The presentation is of general nature and is not intended to be an exhaustive analysis of all possible tax aspects
relating to the shares in the Company or dividends paid from the Company. Accordingly, prospective holders of
shares in the Company should consult their tax advisors as to the consequences under the tax regulations of
Norway and elsewhere.

The presentation is subject to any amendments to tax laws and regulations that may occur after the date of this
Prospectus, including any retroactive enforcement.


11.2        Norwegian Shareholders
Taxation of dividends - Individual shareholders
Dividends distributed from the Company to Norwegian individual (personal) shareholders are taxable as ordinary
income at a rate of 28 percent. However, this will only apply for dividends exceeding a calculated risk-free return
on the investment (tax-free return), which thus is tax exempt.

The tax-free return is calculated annually on a share-by-share basis and pertains to the owner of the share at the
end of the year. The tax-free return is calculated on the basis of the shareholders cost price on the share
multiplied with a statutory risk-free interest. The risk-free interest is determined on the basis of interest on 3-
months Treasury bills, as published by Norges Bank (Bank of Norway), after tax.

If the actual distributed dividends for one year are less than the calculated tax-free return (calculated for each
share), the surplus tax-free return can be carried forward to be offset against dividends or capital gains on the
same share for subsequent years. Any such surplus tax-free return will be added to the basis for calculating the
annually tax-free return for subsequent years.


Taxation of dividends - Corporate shareholders
Dividends distributed from the Company to Norwegian corporate shareholders (limited liability companies and
similar entities) fall within the scope of the Norwegian exemption method.

However, 3 percent of dividends from the Company will not be completely exempt from taxation, but shall be
considered taxable income and subject to tax at a rate of 28 percent. This results in an effective tax rate of 0.84
percent on dividends distributed from the Company to Norwegian corporate shareholders. The same applies
to dividends distributed to Norwegian shareholders being partnerships/transparent entities for tax purposes.
Hence, also for Norwegian shareholders being partnerships/transparent entities, 3 percent of dividends from the
Company shall be considered taxable income, to be taxed on the hands of the participants.


Taxation on realization of shares - Individual shareholders
Sale, redemption or other disposal of shares is considered a realization for Norwegian tax purposes.

A capital gain or loss generated by a Norwegian individual shareholder through a realization of shares in the
Company is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the
basis for computation of ordinary income in the year of disposal. Ordinary income is taxable at a rate of 28
percent. Gain is subject to tax and loss is deductible for tax purposes irrespective of the duration of the ownership
and the number of shares owned and/or disposed of.

The capital gain or loss is calculated based on the consideration received for the share less the cost price of the
share, transactional expenses and any surplus tax-free return on the share at the time of disposal (as a result of
the non-utilization of the calculated annual tax-free returns). However, any surplus tax-free return may only be




                                                         59
deducted in order to reduce a capital gain, and not to produce or increase a loss. Further, any surplus tax-free
return on one share cannot be set-off against gains on another share. Expenses and broker’s commission at both
the purchase and the sale are deductible when calculating the capital gain or loss.

A FIFO (First In First Out) principle applies if shares are not acquired simultaneously.

Please note that special rules may apply for shareholders that have emigrated or will emigrate.


Taxation on realization of shares - Corporate shareholders
For Norwegian corporate shareholders, capital gains related to realization of shares in the Company, and losses
related thereto, fall within the scope of the Norwegian exemption method.

However, 3 percent of net tax-exempt profits from each income year will not be completely exempt from taxation,
but shall be considered taxable income and subject to tax at a rate of 28 percent. This results in an effective tax
rate of 0.84 percent for Norwegian corporate shareholders on net profits related to realization of shares in the
Company. Any net losses are not tax-deductible. The same applies to realization of shares in the Company
owned by Norwegian partnerships/transparent entities for tax purposes. Hence, also for Norwegian shareholders
being partnerships/transparent entities for tax purposes, 3 percent of capital gains related to realization of shares
in the Company shall be considered taxable income, to be taxed on the hands of the participants.


Net wealth tax
Norwegian corporations are exempt from net wealth taxation.

Norwegian individual shareholders are subject to net wealth tax. The marginal net wealth tax rate is currently 1.1
percent. When calculating the net wealth tax base, shares in listed companies (including on Oslo Axess) are
valued to the shares’ quoted value as on January 1 in the assessment year.


11.3        Non-Resident Shareholders
Withholding tax on dividends
Dividends distributed from the Company to non-Norwegian shareholders (individual and corporate shareholders
not having Norwegian tax domicile) are generally subject to Norwegian withholding tax. The withholding tax on
dividends is 25 percent, but is normally reduced to 15 percent (or lower) if a tax treaty applies.

However, dividends distributed from the Company to non-Norwegian corporations tax domiciled and with an
actual establishment and which carries on genuine economic activities in an EEA (European Economic Area)
member state, are not subject to withholding tax.

Further, personal shareholders resident in an EEA member state may claim that a tax-free return is calculated
and applied in the same way as for Norwegian personal shareholders, cf. above. However, the deduction does
not apply in the event that the withholding tax rate, pursuant to an applicable tax treaty, leads to a lower actual
taxation on the dividends distributed than the withholding tax rate of 25 percent, less the tax-free return. Any tax-
free return is only available upon application, and any refund is given after the end of the income year.

Nominee registered shares will be subject to 25 percent withholding tax unless the nominee has obtained an
approval from the Norwegian Tax Directorate that a lower tax rate shall apply. To obtain such approval the
nominee must file a summary to the Norwegian tax authorities including a survey of all beneficial owners that are
subject to withholding tax at a reduced rate.

Non-Norwegian shareholders that have suffered a higher withholding tax than set out in an applicable tax treaty or
the Norwegian Tax Act may apply to the Norwegian tax authorities for a refund of the excess withholding tax
deducted.

If the shares are held in respect of a business (permanent establishment) liable to taxation in Norway, dividends
distributed from the Company will be subject to the same taxation as for Norwegian shareholders, cf. above.


The Company’s responsibility for the withholding of taxes
Non-Norwegian shareholders subject to withholding tax on dividends are subject to advance tax payment. The
Company is responsible for the withholding of all tax that is levied on dividends to foreign shareholders and to
report and pay in the withholding tax.




                                                         60
Capital gains
Non-Norwegian shareholders (individuals and corporations) are not subject to Norwegian tax on capital gains
arising from the disposal of shares in the Company, neither capital gains tax nor withholding tax. However, a tax
liability in Norway may arise if the shares are held in respect of a business (permanent establishment) liable to
taxation in Norway, or if an individual has previously been tax domiciled in Norway.


11.4        Duties on the Transfer of Shares
No stamp or similar duties are currently imposed in Norway on the transfer of shares whether on acquisition or
disposal.


11.5        Inheritance Tax
Transfer of shares by way of inheritance or gift may be subject to Norwegian inheritance or gift tax.




                                                        61
12          LEGAL AND ARBITRATION PROCEEDINGS

March 19, 2008 a claim was registered against Aqua Bio Technology at Stockholms Tingsrett submitted by Trial
Form Support AB (TFS). Their claim was linked to payments for consultancy work performed by TFS for the
Company. Aqua Bio Technology claimed breach of contract due to delays in delivery, which negatively impacted
the Company’s business. The parties has settled the claim whereas TFS is paid SEK 221 400, equalling 1/3 of
their initial claim.

Except for the above mentioned, as of the date of this prospectus and for the preceding 12 months, no company
in the Aqua Bio Group is or has been involved in any governmental, legal or arbitration proceedings, including any
such proceedings which are pending or threatened of which the company is aware of, which may have, or have
had in the recent past significant effects on the Aqua Bio Group’s financial position or profitability.




                                                       62
13          ADDITIONAL INFORMATION
13.1        Documents on Display
For the life of this Prospectus, the following documents may be inspected as indicated below:

     •   Memorandum of Association
     •   Articles of Association for Aqua Bio Technology ASA
     •   Aqua Bio Technology’s Annual Report for 2008 (IFRS) with Auditor’s Report
     •   Aqua Bio Technology’s Annual Report for 2007 (IFRS) with Auditor’s Report
     •   Aqua Bio Technology’s Annual Report for 2006 (IFRS) with Auditor’s report
     •   Kilda Biolink’s (former Aqua Bio Technology AS) Annual Report for 2006 (NGAAP) with Auditor’s Report

The documents will be available for inspection for the life of the Prospectus on The Company’s homepage
www.aquabiotechnology.com or at the Company’s principal place of business at C Sundts gate 51, N-5004
Bergen, Norway, and the Manager’s head quarters at Haakon VIIs gate 9, 0104 Oslo, Norway, respectively,
during normal business hours.


13.2        Third party information
The information in this Prospectus that has been sourced from third parties has been accurately reproduced and
as far as the Company is aware and able to ascertain from information published by that third party, no facts have
been omitted which would render the reproduced information inaccurate or misleading. The source of third party
information is identified where used.




                                                       63
14           DEFINITIONS AND GLOSSARY


Articles of Association            The articles of association of Aqua Bio Technology ASA as at the date of
                                   the Prospectus

Code of Practice                   The Norwegian Code of Practice for Corporate Governance of November
                                   28, 2006

IFRS                               International Financial Reporting Standards

Manager                            VentureLab AS

NCA                                The Norwegian Competition Authority

NOK                                Norwegian Kroner, the lawful currency of the Kingdom of Norway

Norwegian Securities Trading Act   The Securities Trading Act of June 29, 2007 No 75, as amended
                                   (‘Verdipapirhandelloven’)

NGAAP                              Norwegian Generally Accepted Accounting Principles

NTNU                               Norges Teknisk-Vitenskapelig Universitet

OTC                                The Norwegian Over the Counter Market for unlisted shares administered
                                   by the Norwegian Securities Dealers Association.

Prospectus                         This Prospectus, dated May 8, 2009, prepared in connection with the
                                   Listing of the new shares on Oslo Axess

Public Limited Liabilities Act     The Norwegian Public Limited Companies Act of June 13, 1997 No 45
                                   (‘Allmennaksjeloven’)

Shares                             All shares issued by the Company

The Company                        Aqua Bio Technology ASA

The Aqua Bio Group or the Group    Aqua Bio Technology ASA and its subsidiaries.

The Subsidiary                     Kilda Biolink AS (formerly Aqua Bio Technology AS). Organization number
                                   981 954 548

VPS                                Verdipapirsentralen (Norwegian Central Securities Depository), which
                                   organized the Norwegian paperless securities registration system.




                                                    64
Appendix 1: Articles of Association for Aqua Bio Technology ASA

                                       (Office translation)

                                 ARTICLES OF ASSOCIATION
                                           FOR
                                AQUA BIO TECHNOLOGY ASA


§1      Company Name
       The company’s name is Aqua Bio Technology ASA. The company is a public limited
       liability company.

§2     Registered Office
       The company’s registered office is in the municipality of Sandefjord, Norway.

§3     Purpose
       The company’s purpose is to develop and market dermatological, cosmetic and other
       life science products by utilizing new technology and research results. This shall be
       obtained through own R&D and through cooperation with research institutions
       domestically as well as internationally. The company may as well invest in other
       enterprises.

§4     Share Capital
       The company’s share capital is NOK 14 295 194.60 divided on 71 475 973 shares,
       each with a nominal value of NOK 0.20.

§5     Management
       The company’s board of director comprises 3 to 6 board members according to
       further resolution of the shareholders’ meeting. Binding signatures for the company
       are either jointly by the chairman of the board and the chief executive officer or jointly
       by two board members. The board of directors may grant power of attorney. The
       company shall have a chief executive officer.

§6     General Meeting of Shareholders
       The ordinary annual general shareholders’ meeting shall address:
       1. Approval of the annual financial statement and annual report, including the
          distribution of dividends.
       2. Other matters that shall be addressed at the shareholders’ meeting according to
          the law or the articles of association.

§7     Share Register
       The company’s shares are freely tradable. The company’s shares shall be registered
       in the Norwegian Registry of Securities

§8     Election Committee
       The company shall have an election committee comprising of 3 members who are
       elected by the shareholders’ meeting. The election committee members are elected
       for two years.

§9      Relationship to the Securities Act
       Furthermore, reference is made to the at any time prevailing securities act for public
       limited liability companies.

     Amended and resolved at the extraordinary shareholders’ meeting on April 16, 2009




                                               65
Appendix 2a: Aqua Bio Technology’s (formerly Kilda Biolink) Annual Report for 2006 (IFRS)
with Auditor’s Report (Translated version)
Appendix 2 b: Kilda Biolink’s (former Aqua Bio Technology AS) Annual Report for 2006
(NGAAP) with Auditor’s Report. (Translated version)

                                                                                                                                  Profit & Loss Accounts

                                                                                                                                Aqua Bio Technology AS                 In NOK

                                                                                           Operating revenues and Operating costs                Note      2006         2005

                                                                                           Sales revenues                                                  2 939 600    1 000 000
                                                                                           Other operating revenues                                        1 500 000      528 500
                                                                                           Sum operating revenues                                          4 439 600    1 528 500

                                                                                           Cost of raw materials and goods                                   476 470     122 705
                                                                                           Wages, salaries etc.                                   2        2 150 511     503 887
                                                                                           Other operating costs                                  2          951 180     170 364
                                                                                           Sum operating costs                                             3 578 162     796 956

                                                                                           Operating result                                                 861 438      731 544
                                   Annual Report
                                                                                           Financial revenues and financial costs
                                                                                           Other earnings on interest                                        44 084        4 199

                                         2006                                              Depreciation of other financial operating assets
                                                                                           Other interest costs
                                                                                                                                                            124 999
                                                                                                                                                                 116
                                                                                                                                                                               0
                                                                                                                                                                               0
                                                                                           Result of financial items                                         -81 031       4 199

                 AQUA BIO TECHNOLOGY AS                                                    Result before tax                                                780 408      735 744
                                                                                           Tax on ordinary result                                 3         -26 005       89 078
                                                                                           Ordinary result                                                  806 413      646 666

                                                                                           Profit(loss) for the year                                        806 413      646 666


                                                                                           Transfers
                                                                                           Allocated to other shareholder’s equity                          806 413      646 666
                                                                                           Sum transfers                                                    806 413      646 666




                                                                                           Aqua Bio Technology AS                                                         Page 1




                                                                                                                                                                                    2
                                                                                       1
                                                                                                                               Balance
                                           Balance                                                                      Aqua Bio Technology AS

                              Aqua Bio Technology AS               In NOK        Equity and liabilities                                      Note      2006                  2005


Assets                              Note                   2006         2005     Called up and fully paid share capital
                                                                                 Share capital 1000 @ 100                                            100 000                100 000

Operating assets
Intangible assets
                                                                                 Sum called up and fully paid share capital                          100 000                100 000
Rights                                                  869 981       869 981
Sum intangible assets                                   869 981       869 981    Retained earnings

                                                                                 Other equity                                                       1 552 071               745 658
Financial operating assets
Investments in subsidiaries                4                  1              0
                                                                                 Sum retained earnings                                              1 552 071               745 658
Sum financial assets                                          1              0

                                                                                 Sum equity                                                         1 652 071
Sum operating assets                                    869 982       869 981


                                                                                 Liabilities
                                                                                 Allocations for commitments
Current assets                                                                   Deferred tax                                                 3            0                 62 339
Receivables
Other receivables                          3            794 696       313 090
                                                                                 Sum allocations for commitments                                           0                 62 339
Sum receivables                                         794 696       313 090


Bank deposits, cash etc.                               1 691 841      920 342    Other long-term liabilities
                                                                                 Loans from shareholders                                             900 000                900 000
                                                                                 Sum other long-term liabilities                                     900 000                900 000
Sum current assets                                     2 486 536    1 233 431

Sum assets                                                                       Short-term liabilities
                                                       3 356 518    2 103 412
                                                                                 Trade creditors                                                     253 257                 33 906
                                                                                 Tax payable                                                               0                 26 739
                                                                                 Tax payable and other deductions                                    140 610                 40 654
                                                                                 Other short-term liabilities                                        410 579                194 116
                                                                                 Sum short-term liabilities                                          804 447                295 414


                                                                                 Sum liabilities                                                    1 704 447


                                                                                 Sum liabilities and assets                                                      2          103 412



                                                                                 Eikelandsosen,


                                                                                                             Arild Roar Rasmussen                     Bernt Th. Walther
                                                                                                        Chairman of the Board of Directors              Board Member
Aqua Bio Technology AS                                              Page 2


                                                                                         Tom Stemre                                                   Nils Magne Fjereide
                                                                                         Board Member                                                   Board Member


                                                                             3                                                                                                        4
                                                                                                                                    Notes to the Annual Accounts
Notes to the Annual Accounts
AQUA BIO TECHNOLOGY AS                                                                                                              AQUA BIO TECHNOLOGY AS

Accounting principles
                                                                                                                                       Note 3 Taxation                                                                                      In NOK
The Annual Accounts have been prepared in accordance with the Norwegian Accounting Act of 1998. The Accounts were
prepared in accordance with Norwegian accounting standards.

The main rule for assessing and classifying assets and liabilities                                                                     Tax for the year                                                                        2006             2005
Assets for permanent ownership or use are classified as fixed assets. Other assets are classified as current assets. Receivables
that are to be paid back within one year are classified as current assets. Analogue criteria formed the basis when classifying         Tax entered on ordinary result:
short-term and long-term liabilities.                                                                                                  Tax payable                                                                           36 334           26 739
                                                                                                                                       Changes in deferred tax / deferred tax advantage                                     -62 339           62 339
Fixed assets are assessed at cost of acquisition, but are depreciated to their real worth when the fall in worth is deemed to be
permanent. Fixed assets with limited economic life are depreciated over the estimated economic life. Current assets are                Tax on ordinary result                                                               -26 005           89 078
assessed at the lowest value of the cost of acquisition and estimated real worth (Lowest worth principle). Liabilities are
entered in the balance at the nominal received amount at the time of establishment. Short-term liabilities are written up to real
worth resulting from changes in interest rates.                                                                                        Tax payable of tax cost for the year
                                                                                                                                       Ordinary result before tax                                                           780 408          735 744
                                                                                                                                       Permanent differences                                                               -650 641         -417 604
Some items are assessed in accordance with other rules and are explained below.
                                                                                                                                       Basis for assessed tax cost for the year                                             129 767          318 140
Intangible assets                                                                                                                      Basis for tax payable in Profit & Loss Accounts                                      129 767          318 140
Expenses associated with intangible assets, hereunder expenses incurred in research & development, are entered in the                  Application of deficit to be carried forward                                               0         -222 642
balance to the degree the criteria for entering these in the balance are met with.
                                                                                                                                       Taxable income                                                                       129 767           95 498
Shares in subsidiaries
Investments in subsidiaries are entered at their real worth.                                                                           Tax payable on ordinary result for the year                                           36 334           26 739
                                                                                                                                       Sum tax payable of ordinary result                                                    36 334           26 739
Receivables
Trade receivables and other receivables are entered at face value after deductions for estimated losses. Allocations for losses
are made on the basis of individual assessments of the receivables. An additional unspecified allocation for losses on other           Tax payable in the Balance Sheet:
trade receivables is made to cover other losses that may arise.                                                                        Tax payable on result for the year                                                    36 334           26 739
                                                                                                                                       - Receivable “Skattefunn”                                                           -800 000
Note 1 Shareholders per 31.12.2006                                                                                                     Sum tax payable in Balance Sheet                                                    -763 666           26 739

                         Ordinary                               Ownership share
                                                                                                                                    The receivable tax incl. “Skattefunn” is entered in the balance at NOK 763 666.- and is subject to approval by the tax
Bolaks AS                                 425                                        42,5                                           authorities.
ZYM Holding                               575                                        57,5
Total number of shares                   1000                                      100,0                                            Basis for deferred tax at 31.12.2006: _________                              0


Note 2 Remunerations
                                                                                                                                    Note 4 Shares in subsidiaries.
A total of 3.5 man-years were worked in the company in 2006.                                                                        Shares in subsidiaries were acquired for NOK 125 000 and written down to NOK 1, which is the sales sum of the shares in
Remunerations to the Managing Director were paid out with NOK 0, and a total of NOK 100,000 has been paid as fees to                2007.

the Board of Directors. Auditor’s fees of NOK 30,000 have been paid, of which NOK 12,000 for other services than

auditing.




                                                                                                                               5                                                                                                                             6
7
Appendix 3: Aqua Bio Technology’s Financial Report for 2007 (IFRS) with Auditor’s report
(Translated version)                                                                           Contents

                                                                                                      Consolidated income statement                     16   Net foreign exchange gains/(losses)
                                                                                                      Consolidated balance sheet                        17   Earnings per share
                                                                                                      Changes in Group equity                           18   Commitments
                                                                                                      Consolidated cash flow statement                  19   Business integration
                                                                                                      Notes to the consolidated financial statements:   20   Related parties transactions
                                                                                                 1    General information                                    Significant events after the balance
                                                                                                                                                        21      sheet date
                                                                                                  2   Summary of significant accounting principles
               Consolidated Financial Statement 2007                                            2.1   Basis of preparation
                                                                                                2.2   Consolidation basis
                                                                                                2.3   Segment reporting
                                                                                                2.4   Translation of foreign currency
                                                                                                2.5   Tangible fixed assets
                                                                                                2.6   Intangible assets
                                                                                                2.7   Inventories
                                                                                                2.8   Trade receivables
                                                                                                2.9   Government grants
                                                                                               2.10   Cash and cash equivalents
                                                                                               2.11   Trade payables
                                                                                               2.12   Loan facilities
                                                                                               2.13   Payable and deferred tax on income
                                                                                               2.14   Employee benefits and share options
                                                                                               2.15   Lease agreements
                                                                                               2.16   Revenue accounting
                                                                                                  3   Financial risk management
                                                                                                  4   Critical accounting estimates and assessment
                                                                                                  5   Segment reporting
                                                                                                  6   Tangible fixed assets
                                                                                                  7   Intangible assets
                                                                                                  8   Trade receivables and other receivables
                                                                                                  9   Inventories
                                                                                                 10   Cash and cash equivalents
                                                                                                 11   Share capital
                                                                                                 12   Trade payables and other current liabilities
                                                                                                 13   Loans
                                 31 December 2007                                                14   Tax payable and deferred tax
                                                                                                 15   Payroll costs




                                                                                           1                                                                                                        2
Consolidated income statement                                                                                                  Consolidated balance sheet
NOK                                                                                               As at 31 December            NOK                                                                                                As at 31 December
                                                                                       Note      2007          2006                                                                                                   Note        2007          2006
Revenues                                                                               2, 5      7 037 989      7 520 100      ASSETS
Cost of sales                                                                           9       (6 909 362)   (4 404 813)      Fixed assets
Gross profit                                                                                       128 627      3 115 287      Tangible fixed assets                                                                    6          367 532        95 625
Payroll costs                                                                           15      (5 183 316)   (2 387 276)      Intangible assets                                                                      7, 19     68 971 466     6 619 038
Depreciation                                                                           6, 7     (5 816 264)     (787 657)                                                                                                       69 338 998     6 714 663
Other sales and administrative expenses                                                 18      (9 616 075)   (4 109 491)
                                                                                                                               Current assets
Operating result                                                                               (20 487 027)   (4 169 138)      Inventories                                                                            9, 19     37 128 911     9 097 874
                                                                                                                               Trade and other receivables                                                              8        4 640 177     2 894 726
Financial income                                                                       2, 16       106 317        70 551       Cash and cash equivalents                                                               10        1 366 887       129 052
Financial costs                                                                        2, 16     (414 775)      (175 501)
                                                                                                                                                                                                                                43 135 975    12 121 652
Net financial income/(costs)                                                                     (308 458)      (104 950)
                                                                                                                               Total assets                                                                                    112 474 972    18 836 315

Profit/(loss) before tax                                                                       (20 795 485)   (4 274 088)
                                                                                                                               EQUITY
Taxes                                                                                   14      (8 821 121)                -
                                                                                                                               Equity attributed to the Company’s shareholders
Profit/(loss) for the year                                                                     (11 974 365)   (4 274 088)      Share capital                                                                           11        3 600 948       150 000
                                                                                                                               Share premium reserve                                                                           101 630 016    15 270 000
                                                                                                                               Loss carried forward                                                                            (18 355 815)   (6 381 450)
Earnings per share                                                                                                             Total equity                                                                                     86 875 149     9 038 550
– ordinary                                                                              17           (0,92)           (0,59)
– diluted                                                                               17           (0,91)           (0,59)   LIABILITIES


                                                                                                                               Non-current liabilities
The accompanying notes are an integral part of the consolidated financial statement.
                                                                                                                               Deferred tax                                                                           14, 19    16 974 013             0
                                                                                                                               Loans                                                                                   13       1 262 506      2 179 450
                                                                                                                                                                                                                                18 236 519     2 179 450
                                                                                                                               Current liabilities
                                                                                                                               Trade payables                                                                          12        4 625 923     3 397 911
                                                                                                                               Loans                                                                                   13                0     3 490 364
                                                                                                                               Other current liabilities and obligations                                                         2 737 382       730 040
                                                                                                                                                                                                                                 7 363 304     7 618 315
                                                                                                                               Total liabilities                                                                                25 607 714     9 797 765
                                                                                                                               Total equity and liabilities                                                                    112 474 972    18 836 315


                                                                                                                               The accompanying notes are an integral part of the consolidated financial statement.




                                                                                                                               ___________________                            ______________________                    ______________________
                                                                                                                               Kjell H. Bakke                                 Bernt Th. Walther                         Mona Møller
                                                                                                                               Chairman of the Board




                                                                                                                               _______________________                        ______________________                    ______________________
                                                                                                                               Anne-Sofie Utne                                Kjetil Dahl                               Arild R. Rasmussen
                                                                                                                                                                                                                        CEO




                                                                                                                 3                                                                                                                               4
Consolidated statement of changes in shareholders’ equity
                                                                                                                                     Consolidated cash flow statement
NOK                                                    Note                  Equity attributed to the Company’s
                                                                                          shareholders                               NOK                                                                                                  As at 31 December
                                                                                    Share                             Total equity                                                                                           Note         2007          2006
                                                                   Share          premium          Loss carried                      Cash flows from operating activities
                                                                   capital         reserve           forward
Equity at 1 January 2006                                             131 000           6 169 000     (2 107 363)        4 192 637
Profit/(loss) for the year                               5                   -                 -     (4 274 088)       (4 274 088)
                                                                                                                        9 120 000    Profit before tax                                                                         5       (20 795 485)   (4 274 088)
Proceeds from share issue                                11           19 000           9 101 000                  -
                                                                                                                                     Depreciation                                                                                        5 816 264       787 657
Equity at 31 December 2006                                           150 000       15 270 000        (6 381 451)        9 038 550
                                                                                                                                     Change in stocks                                                                         19         1 968 963    (7 539 978)
                                                                                                                                     Change in trade and other receivables                                                    19         (442 463)    (1 215 123)
Equity at 1 January 2007                                             150 000       15 270 000        (6 381 451)        9 038 550
                                                                                                                                     Change in accounts payable                                                               19        1 066 612      2 556 107
Årsresultat                                              5                   -                 -    (11 974 365)      (11 974 365)   Change in short-term debt                                                                19                 0       156 694
Proceeds from share issue                              11, 19      3 450 948       88 375 907                     -    91 826 855
                                                                                                                                     Net cash flow from operating activities                                                           (12 386 110)   (9 528 731)
Costs related to share issue                                               -       (2 015 891)                    -     (2 015 891
Equity capital at 31 December 2007                                 3 600 948      101 630 016       (18 355 815)       86 875 149    Cash flow from investing activities
                                                                                                                                     Acquisitions of fixed assets                                                           6, 7, 19    (1 945 193)   (5 275 726)
The accompanying notes are an integral part of the consolidated financial statement.                                                 Net cash flow from investing activities                                                            (1 945 193)   (5 275 726)


                                                                                                                                     Cash flows from financing activities
                                                                                                                                     Proceeds from issuance of ordinary shares                                              11, 19      19 028 919     9 120 000
                                                                                                                                     Taking up (repayment) of loans                                                         13, 19      (1 816 944)    1 634 450
                                                                                                                                     Change in other short-term debt                                                        13, 19           3 278     1 800 000
                                                                                                                                     Cash adjustments relating to acquisition of Kilda Biolink AS                             19            44 249             0
                                                                                                                                     Net cash flow from financing activities                                                            17 259 502    12 554 450


                                                                                                                                     Change in cash and cash equivalents and utilised drawing rights                                     2 928 199    (2 250 007)
                                                                                                                                     Cash and cash equivalents and utilised drawing rights at 1 January                       10        (1 561 312)      688 695
                                                                                                                                     Cash and cash equivalents and utilised drawing rights at 31 December                     10         1 366 887    (1 561 312)




                                                                                                                                     The accompanying notes are an integral part of the consolidated financial statement.




                                                                                                                          5                                                                                                                              6
                                                                                                                                          2.2 Consolidation basis
                                                                                                                                          Subsidiaries
1. General information
                                                                                                                                          Subsidiaries are all entities (including enterprises with restricted object) where the Group has a controlling influence over the entity’s
                                                                                                                                          financial and operational strategy, normally through ownership of more than 50 per cent of voting shares. Determination of whether a
Aqua Bio Technology ASA (the Company) is an independent developer, manufacturer and seller of cosmetic products and raw                   controlling influence exists includes the effect of potential voting rights that can be exercised or converted on the date of balance.
materials to the cosmetic industry. The production of finished goods is outsourced. Sales are mainly focused on the Nordic                Subsidiaries are consolidated from the time control is transferred to the Group.
market.
                                                                                                                                          The acquisition method is applied for accounting purposes with the purchase of subsidiaries. The acquisition price is measured at fair
With effect from 25 September 2007, the Company is a public limited company based in Norway with registered offices at                    value of the assets that are rendered as compensation with the purchase, equity instruments that are issued, obligations incurred
Framnesveien 7, Sandefjord.                                                                                                               with the transfer of control and direct costs tied to the acquisition itself. Identifiable acquired assets and liabilities and conditional
                                                                                                                                          obligations taken over or incurred are recognised in the financial statements at fair value on the date of acquisition.
The Company is listed on Oslo Axess.
                                                                                                                                          Intragroup transactions, accounts and unrealised profit between group companies are eliminated. Unrealised loss is eliminated but is
The consolidated financial statement was authorised for issue by the Board of Directors on 26 March 2008.                                 regarded as an indicator of the loss in value in relation to the depreciation of the transferred asset. Accounting principles in
                                                                                                                                          subsidiaries are changed where this is deemed necessary to achieve conformity with the consolidated accounting principles.

                                                                                                                                          Refer to note 19 for further information concerning the acquisition of subsidiaries.
2. Summary of significant accounting principles
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These         2.3 Segment reporting
policies have been consistently applied to all the years presented, unless otherwise stated.                                             A business segment is part of the enterprise that delivers products or services that is subject to risks and returns that are different
                                                                                                                                         from those of other business areas. A geographical market (segment) is a part of the enterprise that delivers products and
                                                                                                                                         services within a limited geographical area that is subject to risks and return that are different from other geographical markets.
2.1 Basis of preparation
The consolidate financial statements of Aqua Bio Technology ASA are prepared in accordance with International Financial                  The Company has identified one business segment; sale of cosmetic products, and three geographical segments; Norway, Sweden
Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board (IASB) as stipulated by           and others. Financial information relating to segments is presented in Note 5.
the EU, that are relevant to its operations and for annual reporting periods beginning on 1 January 2006.
The consolidated financial statements are prepared according to the historical cost principle.

                                                                                                                                         2.4 Foreign currency translation
STANDARDS, INTERPRETATIONS AND CHANGES WHICH CAME ONTO FORCE DURING 2007, BUT WHICH ARE
IRRELEVANT FOR THE GROUP:                                                                                                                (a) Functional and presentation currency
The following standards, changes and interpretations are mandatory for the accounting year starting 1 January 2007 or later, but are     The consolidated financial statements are presented in NOK, which is the parent company’s functional and presentational
considered irrelevant for the Group:                                                                                                     currency.


 Standard/              Title                                        Date of issue                    Applicable to accounting           (b) Transactions and balance sheet items
 interpretation                                                                                       periods commencing on              Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
 IFRIC 4                Insurance Contracts                                                                                              transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
 IFRIC 7                Financial instruments: Disclosures           August 2005                      1 January 2007                     year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
 IFRIC 8                Scope of IFRS 2                              January 2006                     1 May 2006                         statement.
 IFRIC 9                Reassessment of Embedded Derivatives         March 2006                       1 June 2006
                                                                                                                                         2.5 Tangible fixed assets
STANDARDS, INTERPRETATIONS AND CHANGES WHICH HAVE NOT YET COME INTO FORCE AND WHERE THE
                                                                                                                                         Tangible fixed assets are recognised at acquisition cost less depreciation. Acquisition cost includes expenditure that is directly
GROUP HAS NOT OPTED FOR EARLY APPLICATION:
                                                                                                                                         related to the acquisition of the fixed asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate
The following interpretations of existing standards are published and will be mandatory for application by the Group in the accounting
                                                                                                                                         asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the
year starting 1 January 2008 or later, but without the Group opting to apply prematurely.
                                                                                                                                         cost of the item can be measured reliably. The carrying amount relating to the replaced parts is recognised in the income statement.
 IAS 23 revised          Borrowing Costs                               March 2007                       1 January 2009
                                                                                                                                         All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
 IFRIC 12                Service Concession Arrangements               November 2006                    1 January 2008
 IFRIC 13                Customer Loyalty Programmes                   June 2007                        1 July 2008
                                                                                                                                         Tangible fixed assets are depreciated using the straight-line method over the assets expected useful life as follows:
 IFRIC 14                IAS 19 – The Limit on a Defined Benefit       July 2007                        1 January 2008
                         Asset, Minimum funding Requirements                                                                             – Fixtures and fittings, tools, office machinery and similar assets:        5 years
                         and their Interaction
                                                                                                                                         The residual values and useful lives of the assets are reviewed, and adjusted if necessary, at each balance sheet date.
                                                                                                                                         When the balance sheet value of an asset is higher than the estimated recoverable amount, the value is written down to the
                                                                                                                                         recoverable amount (note 2.7).
The preparation of financial statements in conformity with IFRS requires the use of estimates. It also requires management to
exercise professional judgement in the process of applying the Company’s accounting policies. The areas involving a higher
                                                                                                                                         Gains and losses on disposals are recognised in the income statement net under other loses/gains, and constitute the difference
degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated financial
                                                                                                                                         between sale price and balance sheet value.
statements are disclosed in Note 4.




                                                                                                                             7                                                                                                                                            8
2.6 Intangible assets                                                                                                                       2.12 Loan facilities
                                                                                                                                            Loans are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, loans are recognised at
Research and development                                                                                                                    amortised cost calculated using the effective interest method. The difference between the amount borrowed (less transaction
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design                costs) and the redemption value is recognised in the income statement over the period of the loan.
and testing of new or improved products) are recognised as intangible assets only when the Company can demonstrate the
technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its    2.13 Payable and deferred tax
ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the       The tax cost consists of tax payable and the change in deferred tax.
asset and the ability to measure reliably the expenditure during the development. Other development costs are recognised as an
expense as incurred. Development costs previously recognised as an expense are not recognised in the balance sheet in                       Tax payable
subsequent periods. Development costs that have a limited useful life and that have been capitalised are amortised from the                 Tax payable consists of the taxable result for the year. Taxable result is different from the accounting result because certain
commencement of the commercial production of the product on a straight-line basis over the period of its expected useful life               revenues and expenditures are accounted tax-wise to other periods in relation to the normal accounting period. In addition,
(maximum 3 years). Patents and similar rights are depreciated from the date they are allotted according to the straight-line method         certain revenues and expenditures are not part of the tax base. The Company’s tax payable is based on tax rates that are agreed
over the patents’ or similar rights’ expected useful life.                                                                                  or are primarily agreed on the date of balance.

The Company has no intangible assets with undefined useful lives.                                                                           Deferred tax/tax advantage
                                                                                                                                            Deferred tax advantage is recognised when it is deemed probable that the Company will have adequate taxable earnings in
Balance sheet development costs are tested for loss in value in accordance with IAS 36. Current development projects are tested             subsequent periods to be able to utilise the tax advantage. The companies recognise previously unrecognised deferred tax
for loss in value at each year-end.                                                                                                         advantages to the extent it has become probable that the company can utilise the deferred tax advantage. Similarly, the
                                                                                                                                            company will reduce its deferred tax advantage to the extent the company no longer regards it as probable that it will be able to
2.7 Inventories                                                                                                                             utilise the deferred tax advantage.
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method.
The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and
                                                                                                                                            Deferred tax and deferred tax advantage are measured based on expected future tax rates to the companies in the Group where
related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the
                                                                                                                                            temporary differences have arisen.
estimated selling price in the ordinary course of business, less applicable variable selling expenses.

                                                                                                                                            Deferred tax and deferred tax advantage are accounted at nominal value and are classified as financial assets (non-current
2.8 Trade receivables                                                                                                                       liabilities) in the balance sheet.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective               Tax payable and deferred tax are recognised direct against equity to the extent the tax items are related to equity capital
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant         transactions.
financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments (more than 30 days overdue) are considered 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,                2.14 Employee benefits and share options
discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
                                                                                                                                            Retirement benefit obligations
account, and the amount of the loss is recognised in the income statement within selling and marketing costs. When a trade
                                                                                                                                            The Company refers to current statutory provisions concerning pension saving for its employees. This means that 2% of the
receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts
                                                                                                                                            employees’ earnings is paid as a contribution to a separate legal entity that administers the employees’ pension schemes. The
previously written off are credited against selling and marketing costs in the income statement.
                                                                                                                                            Company has no legal or other obligation to undertake further payments after the contribution is paid. Pension contributions are
2.9 Government grants                                                                                                                       recognised as payroll costs when they fall due.

Government grants are entered in the balance sheet under trade and other receivables (cf. note 8). The amounts are entered                 Share options
when it can be confirmed with reasonable certainty that the grant will be received and that appurtenant conditions will be                 The fair value of allotted share options is factored in as a payroll cost with a corresponding increase of the equity capital. Fair value
followed.                                                                                                                                  is measured at the time the share options are allotted and is distributed over the periods until the share option owner has earned
                                                                                                                                           an unconditional right to use the options. The fair value of allotted share options is measured using the Black & Scholes model
2.10 Cash and cash equivalents                                                                                                             (B&S), which takes account of the duration and conditions for the allotment of the options. The amount factored in as a cost is
Cash and cash equivalents includes cash in hand, deposits on call at banks, and other short-term, easily liquidated investments            adjusted to reflect the actual number of share options earned, apart from instances where lapse is only attributable to the share
with a maximum 3 months original maturity. Bank overdrafts, including loans, are shown in the balance sheet under current                  price not reaching the limit for recovery.
liabilities.

                                                                                                                                            2.15 Lease agreements
In the consolidate cash flow statement, cash and cash equivalents are as defined above, but corrected for called on overdrafts.
                                                                                                                                            Lease agreements where a significant part of the risk and return related to ownership is retained by the lessor are classified as
                                                                                                                                            operational lease agreements. Lease payments relating to operational agreements are recognised on a straight-line basis over the
2.11 Trade payables
                                                                                                                                            period of the lease.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.                                                                                                                                     2.16 Revenue accounting
                                                                                                                                            The Company produces and sells cosmetic products to wholesalers. Proceeds from the sale of goods are recognised in the
                                                                                                                                            income statement when the Company has delivered the goods to the wholesaler. The wholesaler may choose whatever sales
                                                                                                                                            channel he prefers, and is also free to set the price of the product, and there are no unfulfilled obligations that can affect the
                                                                                                                                            wholesaler’s acceptance of the product. Delivery is not complete until the products are dispatched to an agreed location and when
                                                                                                                                            the risk of loss and obsolescence is transferred to the wholesaler. In addition, the wholesaler must have accepted the delivery as part




                                                                                                                               9                                                                                                                                        10
of the contract, the deadline for submitting complaints must have expired or there must be proof that all criteria related to the delivery   the values identified by PPA, the deferred tax advantage identified is balanced against tax. Refer to note 19 for further
are satisfied. Sales revenue consists of the product’s fair value minus VAT and any discounts.                                               information.



3. Financial risk management
The Company’s activities involve to a certain extent various types of financial risk. The Group’s primary risk management plan is
                                                                                                                                             5. Segment information
focused on the unpredictability of the capital markets, and is aimed at minimising the potential negative effects on the Group’s
financial results. The Company does not make use of any financial derivatives to safeguard itself against financial risk.                    To date, the Company is only committed to selling finished products to distributors in various geographical markets. Hence, the
                                                                                                                                             Company has identified sale of products as the only business segment. Sales are mainly conducted in Norway and Sweden, but
Currency risk                                                                                                                                the Company has also sold products across the Nordic region. On this basis, defined geographical segments are Norway,
The company’s transactions are mainly conducted in NOK and/or SEK. Due to limited scope, the Group has not entered into                      Sweden and other. The Company’s geographical segments are based on sales to external customer’s location. The Company is
any contracts to secure transactions in a foreign currency.                                                                                  only present in Norway, and thus, no assets or liabilities are allocated to other geographical segments.


Interest risk                                                                                                                                The segment results for 2007 are as follows:
The company’s interest risk is related to long-term loans. Loans with floating interest rates represent an interest risk for the
consolidated cash flow. The company’s interest risk is assessed on a continuous basis.                                                                                                                              Norway         Sweden          Other           Total
                                                                                                                                             Operating revenue                                                       2 821 742      2 427 639      1 788 608      7 037 989
Credit risk                                                                                                                                  Cost of sales                                                          -3 419 777     -2 027 075     -1 462 510      -6 909 362
The company has a limited number of customers and thus a certain concentration of credit risk. The age composition of
                                                                                                                                             Gross earnings                                                           -598 035        400 564        326 098        128 627
receivables is monitored continually and historically credit losses have been low. On the other hand, the company booked a loss
                                                                                                                                             Operating costs                                                                                                    (14 799 390)
in 2007 relating to a distribution agreement with Nutri Pharma ASA. A settlement was reached between the company and Nutri
                                                                                                                                             Depreciation                                                                                                        (5 816 264)
Pharma ASA, which meant a loss to the company of NOK 0.3 million. The company’s main customers are subjected to a credit
assessment annually. In an attempt to further reduce the credit risk in 2008, all new contracts will contain a clause whereby the            Operating result                                                                                                   (20 487 027)
customer agrees to pay for part of the delivery in advance.                                                                                  Net financial income/(costs)                                                                                          (308 458)
                                                                                                                                             Profit/(loss) before tax                                                                                           (20 795 485)
Liquidity risk                                                                                                                               Tax                                                                                                                (8 821 121)
The company has had significant expenses related to development costs and is now in a phase where the focus is on                            Profit/(loss) for the year                                                                                         (11 974 365)
commercialisation of the products. As a result of this, liquidity has at times been tight, but it is the management’s view that the
listing of the shares in December 2007 and future cash flows from operations will be adequate for satisfying expected
                                                                                                                                             The reason for the poor gross earnings is described in more detail in note 9. The depreciation amount comprises NOK 1 663 177
operational needs in the near future. The company’s management revises the cash flow continuously and will implement
                                                                                                                                             (Norway), NOK 1 104 572 (Sweden) and NOK 693 409 (other).
corrective measures as required.

                                                                                                                                             The segment results for 2006 are as follows:
4. Critical accounting estimates and assessment
                                                                                                                                                                                                                    Norway         Sweden          Other           Total
Estimates and assessments are continually evaluated and are based on historical experience and other factors, including
                                                                                                                                             Operating revenue                                                       4 322 313      1 171 580      2 026 207      7 520 100
expectations of future events that are believed to be reasonable under the circumstances. Nothing has happened in the year to
suggest that the basis on which estimates and judgements are made should be changed, and thus no changes have been                           Cost of sales                                                         (3 007 845)      (447 122)       (949 846)    (4 404 813)
noted in effects related to these.                                                                                                           Gross earnings                                                          1 314 468        724 458      1 076 361      3 115 287
                                                                                                                                             Operating costs                                                                                                     (6 496 767)

The Group prepares estimates and makes assumptions related to the future. The accounting estimates resulting from this will by               Depreciation                                                                                                          (787 657)
definition seldom be in accordance with the final result. Estimates and assumptions that represent a significant risk for major              Operating result                                                                                                    (4 169 138)
changes in the balance sheet value of assets and liabilities during the next accounting year are discussed below.                            Net financial income/(costs)                                                                                          (104 950)
                                                                                                                                             Profit/(loss) before tax                                                                                            (4 274 088)

PPA                                                                                                                                          Tax                                                                                                                               -
In connection with the acquisition of Kilda Biolink AS in May 2007, an assessment of the value of assets and obligations, or a               Profit/(loss) for the year                                                                                          (4 274 088)
Purchase Price Allocation (PPA), was made in accordance with IFRS 3 for allocating the purchase price of identified assets and
obligations in the acquired company. In this context, the fair value of stock was identified at NOK 30 million and the fair value of
developed technology was identified at NOK 65.8 million. Refer also to note 19 for further details concerning the allocation of
these values.


Depreciation of intangible assets
Intangible assets constitute a substantial portion of the Company’s balance. Estimated expected useful life and appurtenant
depreciation rates are critical factors for the Company. Estimated expected life is subject to reassessment at the end of each
financial year. Changes in estimates would have a significant effect on the Company’s results.

Deferred tax/deferred tax advantage
The Company has a considerable conveyable tax-related deficit. Following the acquisition of Kilda Biolink AS in May 2007 and




                                                                                                                                   11                                                                                                                             12
6. Tangible fixed assets                                                                                                       7. Intangible assets
                                                                                                             Furniture,                                                                                              Patents and         Development
                                                                                                            fittings and                                                                                 Note         licences              costs            Total
                                                                                                             equipment         At 1 January 2006

Year ended 31 December 2006                                                                                                    Cost                                                                                         539 869          1 576 242       2 116 111
                                                                                                                               Accumulated amortisation and impairment                                                       22 642             19 501           42 144
Opening balance 01.01.06                                                                                                   -
                                                                                                                               Book value 01.01.06                                                                          517 227          1 556 741       2 073 968
Additions                                                                                                         133 125
                                                                                                                               Year ended 31 December 2006
Depreciation                                                                                                      (37 500)
                                                                                                                               Cost                                                                                         539 869          1 576 242       2 116 111
Closing balance 31.12.06                                                                                           95 625      Additions                                                                                             0       5 275 726       5 275 726
                                                                                                                               Book value 31.12.06                                                                          539 869          6 851 968       7 391 837
At 31 December 2006                                                                                                            At 31 December 2006
                                                                                                                               Cost                                                                                         539 869          6 851 968       7 391 837
Cost or re-valued amount                                                                                          135 325
                                                                                                                               Accumulated amortisation and impairment                                                      (49 636)         (723 163)        (772 799)
Accumulated depreciation                                                                                          (39 700)
                                                                                                                               Closing net book amount 31.12.06                                                             490 233          6 128 805       6 619 038
Closing balance 31.12.06                                                                                           95 625

                                                                                                                                                                                                                     Patents and         Development
Year ended 31 December 2007                                                                                                                                                                                           licences              costs            Total
                                                                                                                               At 1 January 2007
Opening balance 01.01.07                                                                                           95 625
                                                                                                                               Cost                                                                                         539 869          6 851 968       7 391 837
Additions                                                                                                         471 519
                                                                                                                               Accumulated amortisation and impairment                                                       49 636            723 163          772 799
Depreciation                                                                                                     (199 612)
                                                                                                                               Book value 01.01.07                                                                          490 233          6 128 805       6 619 038
Closing balance 31.12.07                                                                                          367 532      Year ended 31 December 2007
                                                                                                                               Cost                                                                                         539 869          6 851 968       7 391 837
At 31 December 2007                                                                                                            Increase relating to acquisition                                           19                         0     65 795 070       65 795 070

Cost or re-valued amount                                                                                          606 844      Additions                                                                                             0       2 174 011       2 174 011
                                                                                                                               Book value 31.12.07                                                                          539 869        74 821 049       75 360 918
Accumulated depreciation                                                                                         (239 312)
                                                                                                                               At 31 December 2007
Closing balance 31.12.07                                                                                          367 532
                                                                                                                               Cost                                                                                         539 869        74 821 049       75 360 918
                                                                                                                               Accumulated amortisation and impairment                                                      (85 380)       (6 304 071)      (6 389 451)
                                                                                                                               Closing net book amount 31.12.07                                                             454 489        68 516 977       68 971 466
Furniture, fittings and equipment are depreciated over the estimated lifetime of the assets: 3 - 5 years.
                                                                                                                               Estimated life                                                                            20 years         5-10 years
                                                                                                                               Depreciation method                                                                   Straight line       Straight line

                                                                                                                               Intangible assets in connection with the acquisition of Kilda Biolink AS:
                                                                                                                               In connection with the acquisition of Kilda Biolink AS in May 2007, an assessment of the value of assets and obligations, or a
                                                                                                                               Purchase Price Allocation (PPA), was made in accordance with IFRS 3 for allocating the purchase price of identified assets and
                                                                                                                               obligations in the acquired company. In this context, the fair value of developed technology was identified at NOK 65.8 million. In 2007,
                                                                                                                               development costs increased by a further NOK 2.2 million.

                                                                                                                               Refer to note19 for further information concerning the acquisition of Kilda Biolink AS.

                                                                                                                               Patents and licences
                                                                                                                               Patents relate to costs in connection with acquisition of new patents. Patents are depreciated over the estimated expected life of the
                                                                                                                               respective patent. Licences relate to a cream base acquired in 2003 with the aim of improving this for use in the Company’s own
                                                                                                                               products. This now forms the basis of the Zona products. The Company is entitled to use the licences for a period of 10 + 10 years in
                                                                                                                               accordance with the contract. The licences are depreciated over the estimated expected life.

                                                                                                                               Development costs
                                                                                                                               Development costs are all costs related to the development of products for sale. This is an ongoing process that runs from the end of
                                                                                                                               the research phase until the product is introduced to the market and subsequent product improvements. The development costs are
                                                                                                                               depreciated from and including the month in which the respective product is introduced to the market and over a period of 10 to 15
                                                                                                                               years depending on the product.
                                                                                                                               7. Intangible assets (cont.)


                                                                                                                 13                                                                                                                                        14
As mentioned above, development costs primarily include costs related to the purchase of services from research institutes and
laboratories for better documentation of the positive effects of the Zonase enzyme, and to prevent the possibility of any negative
effects. This documentation is required in order to be able to introduce the products and Zonase to the international market. The major                                                                                                               2007            2006
cosmetic companies who represent the Company’s future customers will demand such documentation before they are willing to enter             Total                                                                                                    2 122 292      1 840 482
into discussions concerning use of Zonase in their own products.                                                                            Neither overdue nor written down                                                                         1 398 528        611 458
Zonase forms the basis of the Zona and Kilda products. Zona was launched on the market in August 2005 and costs related to this
                                                                                                                                            < 30 days                                                                                                    1 571      1 022 469
development are depreciated from and including September 2005. Kilda was launched on the market in May 2006 and costs related to
this development are depreciated with effect from June 2006.                                                                                31 – 60 days                                                                                               257 223        183 967
                                                                                                                                            61 – 90 days                                                                                                      0                  0
Zona and Kilda products are continually being improved for the benefit of the end user. Costs in this connection are recognised in the      > 90 days                                                                                                  464 970          22 588
balance sheet as they arise, assuming they satisfy the requirements of IAS 38, and are depreciated from and including the month the
cost is recognised.

Zona is developed for people with different types of skin complaints, while Kilda is more of a cosmetic product for rejuvenating the      9. Inventories
skin. The use of Zonase in both series requires different approaches and methods since the products differ in terms of appearance
                                                                                                                                                                                                                                                       2007            2006
and texture.
                                                                                                                                          Raw materials                                                                                              31 899 951       1 684 000
In addition to the costs that are capitalised, the Company has also recognised R&D costs in 2007 of just under NOK 200 000.               Work in progress                                                                                              863 077       1 085 706
                                                                                                                                          Finished goods                                                                                              4 365 883       6 328 168
8. Trade and other receivables
                                                                                                                                                                                                                                                     37 128 911       9 097 874
                                                                                                             2007            2006
                                                                                                                                          In connection with the acquisition of Kilda Biolink AS in May 2007, an assessment of the value of assets and obligations, or a
Trade receivables                                                                                          2 122 292        1 840 482     Purchase Price Allocation (PPA), was made in accordance with IFRS 3 for allocating the purchase price of identified assets and
Provision for impairment of trade receivables                                                                (31 160)        (31 160)     obligations in the acquired company. In this context, the fair value of stock was identified at NOK 30 million. Refer to note 19 for
                                                                                                                                          further details concerning the allocation of these values.
Trade receivables - net                                                                                    2 091 132        1 809 322
Pre-payments                                                                                                 110 667            31 314
                                                                                                                                          The Company has calculated the value of obsolescent stock at NOK 3 461 158 in 2007 (NOK 480 450 in 2006). The write-down
Government grants (note 2.9)                                                                                         0        850 000
                                                                                                                                          of stock applies in its entirety to finished goods. Obsolescent stock is charged via the accounts as a raw material cost which thus
Other current receivables                                                                                  2 400 131          201 323
                                                                                                                                          reduces the gross earnings by a corresponding amount. Gross earnings adjusted for obsolescent stock is 51.0% in 2007 (47.8%
Receivables from related parties                                                                               38 247            2 767    in 2006).
At 31 December                                                                                             4 640 177        2 894 726
                                                                                                                                          10. Cash and cash equivalents
Trade receivables                                                                                                                                                                                                                                      2007            2006
Trade receivables comprise non-interest bearing receivables which are primarily granted with 30-days credit. Customers are                Cash at bank and on hand                                                                                   1 109 584          61 531
invoiced after an order is received and made ready for dispatch. Provisions for impairment are based on an assessment of each             Term bank deposits                                                                                           257 303          67 521
individual receivable.
                                                                                                                                                                                                                                                     1 366 887         129 052

Pre-payments
                                                                                                                                          Cash and cash equivalents include the following for the purposes of the cash flow statement:
Pre-payments comprise payments such as deposits and licences.
                                                                                                                                                                                                                                                       2007            2006
                                                                                                                                          Cash and cash equivalents                                                                                  1 366 887         129 052
Government grants
                                                                                                                                          Bank overdrafts                                                                                                     0     (1 690 364)
Refer to note 2.9
                                                                                                                                                                                                                                                     1 366 887      (1 561 312)

Other current receivables
                                                                                                                                          Term bank deposits comprise tax deductions for employees deposited in a dedicated account.
Other current receivables include VAT deductions and other accumulated expenses.


Receivables from related parties
Receivables from related parties comprise among other things payment transfers to employees for use on business trips.




8. Trade and other receivables (cont.)
At 31 December, age distribution of outstanding receivables appears as follows:




                                                                                                                           15                                                                                                                                         16
11. Share capital                                                                                                                     There were no other share option schemes per 31 December 2007.

                                                                                           Ordinary      Nominal      Total share
                                                                                                                                      At an extraordinary general meeting held on 25 September 2007, it was agreed to give the Board permission to establish a share
                                                                       No. of shares        shares        value         capital
                                                                                                                                      option scheme in which a maximum of 825 000 shares could be issued to employees in the Aqua Bio group of companies.
At 1 January 2006                                                          1 500 000        1 500 000          0.10       150 000     Members of the Board are not permitted to participate in this incentive programme.
–    Proceeds from shares issued                                            190 000          190 000           0.10         19 000
                                                                                                                                      Overview of the largest shareholders in the Company as at 31 December 2007:
At 31 December 2006                                                        1 500 000        1 500 000          0.10       150 000
–    Proceeds from shares issued                                             50 000           50 000           0.10           5 000                                                                                                      Shares held      % of total
–    Revaluation of share capital (scrip issue)                                      -      1 550 000          1.00      1 550 000    Zym Holding AS *                                                                                     4 456 250         24.75%
–    Share issue related to acquisition                                    1 550 000        1 550 000          1.00      3 100 000    Bolaks AS                                                                                            3 393 750         18.85%
–    Proceeds from share issue                                              147 070          147 070           1.00      3 247 070    Myrvollveien 3 B AS (controlled by former CEO Einar O. Vangsnes)                                     1 853 257         10.29%
–    Conversion of debt to equity capital                                    40 000           40 000           1.00      3 287 070    Bluefield AS (controlled by Kjetil Dahl, Board member)                                               1 121 725            6.23%
–    Share split                                                         16 435 350        16 435 350          0.20      3 287 070    Pecunia Forvaltning                                                                                  1 000 000            5.55%

–    Proceeds from shares issued                                                                                                      Molvær Ivar Arvid                                                                                      801 665            4.45%
                                                                           1 569 388        1 569 388          0,20      3 600 948
At 31 December 2007                                                                                                                   Svenska Handelsbanken, Nominee                                                                         474 000            2.63%
                                                                         18 004 738        18 004 738          0,20      3 600 948
                                                                                                                                      Kjelstadli Jarl                                                                                        394 886            2.19%
                                                                                                                                      MP Pensjon                                                                                             300 000            1.67%
The total number of affirmative ordinary shares as at 31 December 2007 is 18 004 738 (2006: 1 500 000 shares) at a nominal
                                                                                                                                      Warren Wicklund Asset Management                                                                       300 000            1.67%
value of NOK 0.20 per share (2006: 0.10 per share). All issued shares are fully paid up.
                                                                                                                                      Katalysator AS                                                                                         285 362            1.58%

In February 2007, 50 000 new shares where registered at the Brønnøysund Register Centre.                                              Barske Gleder AS                                                                                       278 000            1.54%
                                                                                                                                      Tenvik Diagnostikk og Forvaltning AS                                                                   250 000            1.39%
The shares were revaluated ahead of the acquisition of Kilda Biolink AS, and the subsequent nominal value was NOK 1.0.
                                                                                                                                      Gullas AS                                                                                              250 000            1.39%
                                                                                                                                      Tannlege Per Hagen AS                                                                                  248 855            1.38%
The total number of shares in the Company was increased by 1 550 000 for use as payment for Kilda Biolink AS in May 2007.
Subsequent to the transaction the total number of shares in the Company was 3 100 000 with a nominal value of NOK 1.0 per             Arealutvikling AS                                                                                      222 222            1.23%
share.                                                                                                                                Krogsrud Invest AS                                                                                     195 000            1.08%
                                                                                                                                      Ukranor AS                                                                                             171 000            0.95%
In Q3 the Company was transformed into a public limited company (ASA) for the purpose of listing on Oslo Axess. At the same
                                                                                                                                      Zonase AS                                                                                              166 666            0.93%
time it was decided to split the shares so that shareholders would receive 5 shares for each existing share held. Subsequent to
this share split, the nominal value of shares in Aqua Bio Technology ASA is NOK 0.20.                                                 Cardinal Science                                                                                       159 000            0.88%
                                                                                                                                      Total                                                                                               16 321 638         90.65%
Ahead of the share split, 187 070 shares were issued via a private placement of 147 070 shares and a debt-conversion
                                                                                                                                      Others                                                                                               1 683 100            9.35%
corresponding to 40 000 shares. These shares were not registered at the Brønnøysund Register Centre before the decision to
implement a share split was taken in September. On 22 October, 935 350 shares were registered corresponding to 187 070                Total number of shares                                                                              18 004 738         100.0%
shares before the split.
                                                                                                                                       * Zym Holding is owned by:
1 569 388 shares were issued via a private placement in November 2007. At year-end 2007, the number of shares in the                  Bernt Th. Walther (Board member)                                                                         70.0%
Company amounted to 18 004 738 at a nominal value of NOK 0.20 share.                                                                  Arild Roar Rasmussen (CEO from 1 February 2008)                                                          17.0%
                                                                                                                                      Tom Stemre (Deputy CEO)                                                                                  13.0%
Share options
Company chairman Kjell H. Bakke has options to acquire shares in Aqua Bio Technology ASA in accordance with an agreement
with the Company dated 8 May 2007. According to the agreement, Bakke has an option to purchase 310 000 shares at NOK 7.20             12. Trade payables and other current liabilities
per share (originally 62 000 shares at NOK 36.00 a share before the 1:5 split in September 2007). The options may be exercised                                                                                                               2007           2006
in the period 8 May 2007 to 14 May 2012.
                                                                                                                                      Trade payables                                                                                       4 625 923      3 397 911
The options are valued using the Black & Scholes model adjusted for the probability of exercising the options early pursuant to
clauses in the agreement. As at 31 December 2007, NOK 0.9 million is recognised in the income statement in connection with the        Owed to related parties (Note 20)                                                                    1 357 052      1 964 450
share option agreement.                                                                                                               Social security, VAT and other taxation payable                                                        543 704        189 709
                                                                                                                                      Accrued expenses                                                                                       919 658        540 304
Development of share options in 2007:
                                                                                                                                                                                                                                           7 446 336      6 092 374
    Outstanding      Allotted in    Exercised in      Expired in       Outstanding       Redeemable     Share price    Date for
    at 01.01.07      the period      the period       the period       at 31.12.07       at 31.12.07      agreed      exercising
               0        310 000                   0                0       310 000                 0      NOK 7,20      14.05.12


11. Share capital (cont.)


                                                                                                                         17                                                                                                                                18
                                                                                                                                                      14. Tax payable and deferred tax (cont.)
13. Loans
                                                                                                               2007                 2006              Deferred tax/tax advantage                                                                         Note              2007            2006
Long-term loans                                                                                                                                       Intangible assets                                                                                                  (17 293 925)     (756 203)
Debentures and other loans                                                                                     1 262 506        2 179 450             Fixed assets                                                                                                            (3 735)        (8 209)
                                                                                                                                                      Current assets                                                                                                      (8 021 064)       114 277
                                                                                                               1 262 506        2 179 450
                                                                                                                                                      Conveyable deficit                                                                                                    8 344 711     2 872 732
Short-term loans
                                                                                                                                                      Total deferred tax/tax advantage at 31 December                                                                    (16 974 013)    (2 222 597)
Bank overdrafts                                                                                                           0     1 690 364
                                                                                                                                                      Change in deferred tax as a result of acquisition                                                                   25 795 134
Debentures and other loans                                                                                                0                    0      Non-booked deferred tax advantage                                                                                              -    2 222 597
Shares issued but not registered at the Brønnøysund Register Centre by year-end                                           0     1 800 000             Change in deferred tax                                                                                                8 821 121               -
                                                                                                                          0     3 490 364
Total loans                                                                                                    1 262 506        5 669 814               Change in deferred tax includes the tax effect of items calculated in over the equity capital with NOK 783 957


                                                                                                                                                      Calculation of effective tax rate                                                                                    2007            2006
Loans amounting to NOK 1 262 506 consist of loans from related parties as well as a loan of NOK 215 000 from an external party
with a fixed interest rate of 5.0%. Loans to related parties all have a fixed rate of interest of 5.0%. Interest accrued is paid when
payment falls due.                                                                                                                                    Profit/(loss) before tax                                                                                           (20 795 485)    (4 274 088)

The Company had an overdraft facility of NOK 2 million at year-end 2007 with a floating interest rate of 9.95%. The overdraft facility                Tax based on applied tax rate (28%)                                                                                 (5 822 735)    (1 196 745)
remained unused at 31 December 2007.                                                                                                                  Effect of permanent differences                                                                                      (674 579)         38 670
                                                                                                                                                      Effect of temporary differences                                                                                      6 497 314      1 396 075
                                                                                                                                                      Effect of government grants                                                                                                    -    (238 000)
14. Tax payable and deferred tax                                                                                                                      Taxes                                                                                                                          -              -
                                                                                                                                                      Effective tax rate                                                                                                          0.0%          0.0%
   Taxes                                                                                     Note          2007                 2006
   Tax payable                                                                                                        -                    -       At year-end, the Group had a conveyable deficit that could be used against future taxable income. This relates to a deferred tax
   Change in deferred tax                                                                                 (8 821 121)                      -       advantage which with predominant probability will reduce future tax liabilities.
   Taxes                                                                                                  (8 821 121)                      -


                                                                                                           2007                 2006
                                                                                                                                                   15. Payroll costs
   Basis for calculating tax
   Profit/(loss) before tax                                                                              (20 795 485)         (4 274 088)                                                                                                                                 2007              2006
   Government grants                                                                                                  0        (850 000)           Wages and salaries                                                                                                      4 194 353       2 027 401
   Permanent differences                                                                                  (2 409 211)            138 107           Employer’s contribution                                                                                                   770 248           332 789
   Change in temporary differences as a result of acquisition                                             91 764 019                       -       Pension costs                                                                                                              90 571            16 725
   Change in temporary differences                                                                       (68 559 321)          4 985 981
                                                                                                                                                   Other                                                                                                                     128 145            10 362
   Basis for calculating tax                                                                                          0                0
                                                                                                                                                                                                                                                                           5 183 316       2 387 276



   Temporary differences                                                                                   2007                 2006               No. of employees                                                                                                                 10                  5
   Intangible assets                                                                                      61 764 019           2 700 725           No. of man-labour years                                                                                                         7.8             4.4
   Fixed assets                                                                                                13 338             29 319
   Current assets                                                                                         28 646 656           (408 132)
                                                                                                                                                   Auditor’s remuneration                                                                                                         2007            2006
   Conveyable deficit                                                                                    (29 802 832) (10 259 757)
                                                                                                                                                   Auditor’s fees                                                                                                            141 996           100 000
   Total temporary differences at 31 December                                                             60 621 476          (7 937 845)
                                                                                                                                                   Tax advice                                                                                                                100 000                    -
                                                                                                                                                   Authorisation fees                                                                                                         15 000                    -
                                                                                                                                                   Other non-audit related services                                                                                          745 205            84 911
                                                                                                                                                   Total                                                                                                                   1 002 201           184 911


                                                                                                                                                   All amounts are ex VAT.


                                                                                                                                                   15. Payroll costs (cont.)



                                                                                                                               19                                                                                                                                                         20
                                                                                                               2007               2006    Remunerations to the CEO and other key personnel in 2007 were based on the same principles as described above.
Other remunerations
                                                                                                                                          A share option scheme was introduced in which the Board of Directors may on an individual basis award share
Remunerations to key personnel (see separate matrix)                                                      1 483 055             622 878
                                                                                                                                          options to company employees with a limit of 825 000 shares for a nominal value of NOK 165 000. Of this, 300 000
Remunerations to members of the Board     (1)
                                                                                                            450 000              50 000   shares corresponding to NOK 60 000 have been awarded to the Finance Director and a leading employee in
Total                                                                                                     1 933 055             672 878   research. Apart from this, no key personnel have received any remuneration beyond their fixed salaries.

     (1)   Remunerations to members of the Board comprises payments of NOK 25 000 to 3 Board members and NOK 375 000 to
                                                                                                                                          Since the Company has been in an establishing phase with the merger of Kilda Biolink AS and Aqua Bio Technology
           the Chairman of the Board for his advisory role to the Company, where his company, Bakke Consulting AS, is paid NOK
                                                                                                                                          AS on 14 May 2007, the Chairman of the Board has from that date received a monthly payment of NOK 50 000 as
           50 000 per month for corporate consultancy services. Bakke was elected as Chairman of the Board on 14 May 2007.
                                                                                                                                          compensation for work in and for the Company. At the same time, the Chairman received a share option to
                                                                                                                                          subscribe to 300 000 shares at a price of NOK 7.20 a share.
     Refer to note 11 for information concerning share options in the Company.
                                                                                                                                          16. Net currency gains/(loss)
Remunerations to key personnel                                                                                 2007               2006
Einar Otto Vangsnes – salary *                                                                              683 334             610 665   Currency differences (taken to expenses/income) in the financial statements are as follows:
Tom Stemre – salary **                                                                                      400 002                  0                                                                                                                  2007            2006
Ståle Bergum - salary ***                                                                                   370 640                  0    Currency gains                                                                                                  53 875          48 690
Einar Otto Vangsnes – pension premium *                                                                      13 667              12 213   Currency loss                                                                                                 (11 439)        (22 511)
Tom Stemre – pension premium **                                                                               8 000                  0    Net currency gains/(loss)                                                                                       42 436          26 179
Ståle Bergum – pension premium ***                                                                            7 413                  0
Total                                                                                                     1 483 055             622 878   17. Earnings per share

 No other payments have been made apart from salaries and pension premiums.
                                                                                                                                          (a) Earnings per share
 * Einar Otto Vansnes was CEO until 31 January 2008                                                                                       Earnings per share is calculated by dividing the part of the annual result that is ascribed to the company's shareholders with a
 ** Tom Stemre is employed in Kilda Biolink AS - the figures include his salary from date of acquisition (14 May 2007)                    weighted average number of issued ordinary shares through the year less own shares.
 *** Ståle Bergum was employed by the company on 10 April 2007                                                                                                                                                                                        2007              2006
                                                                                                                                          Result for the year ascribed to the company's shareholders                                               (11 974 365)      (4 274 088)
 The Company has no severance pay agreements without either the CEO or the Chairman of the Board.
                                                                                                                                          Weighted average number of shares issued *                                                                 12 971 767       7 275 479

 The Board of Director’s statement relating to the fixing of salaries and other remunerations to key personnel.                           Earnings per share (NOK per share)                                                                               (0.92)           (0.59)
 The Company is currently in a situation where running costs are higher than revenues. It is therefore important for the
 Company to maintain total costs, including the salaries of key personnel, at a level that can be justified based on the                  (b) Diluted earnings per share
 Company's financial position.                                                                                                            The calculation of diluted earnings per share uses the weighted average number of issued ordinary shares in circulation
                                                                                                                                          adjusted for the effect of conversion of all potential shares that could result in dilution. Share options are the only shares that can
 Thus, the Company’s CEO and other key personnel receive competitive fixed salaries, without any special payments                         potentially result in dilution. The total number of shares that could be subscribed at market price (calculated at the average share
 beyond this. The CEO and manager for sales and marketing are shareholders in the Company. In addition, share                             price through the year) has been calculated based on the monetary value of the subscription rights to the outstanding share
 options have been granted to the Finance Director and an employee in research. In accordance with authorisation                          options. The number of shares calculated as described above is compared with the number of shares that would be issued if all
 granted by an extraordinary general meeting on 25 September 2007, the Board of Directors have room to award                              the share options were to be exercised.
 share options corresponding to 5% of the share capital on an individual basis.                                                                                                                                                                       2007              2006
                                                                                                                                          Result for the year ascribed to the company's shareholders                                               (11 974 365)      (4 274 088)
 The Board of Directors, therefore, finds no reason to introduce new schemes in connection with remunerations to key
 personnel. There are thus no plans to introduce special pension agreements beyond the mandatory service pension                          Average number of shares issued - ordinary shares *                                                        12 971 767       7 275 479
 scheme (OTP) with payment in kind or other remunerations during 2008 or before the ordinary AGM in 2009.                                 Adjustment for share options                                                                                  196 192                 0
                                                                                                                                          Average number of ordinary shares for calculating diluted earnings per share                               13 167 959       7 275 479
 With the acquisition of Kilda Biolink AS (formerly Aqua Bio Technology AS) on 14 May 2007, the Chairman of the
                                                                                                                                          Diluted result per share (NOK per share)                                                                         (0,91)           (0,59)
 Board has had extended responsibilities and has received payment for this corresponding to NOK 50 000 a month. It
 is assumed that this arrangement will gradually draw to a close sometime in 2008. In addition, the Chairman also has                          * The number of shares is adjusted in order to be comparable with the number of shares after the split in September 2007
 share options corresponding to 300 000 shares.                                                                                                with a nominal value of NOK 0.20.




 15. Payroll costs (cont.)

 Report for 2007.




                                                                                                                           21                                                                                                                                          22
                                                                                                                                          (a) Commitments to related parties (note 12):
18. Commitments                                                                                                                           – Key personnel                                                                                            58 144        388 650
                                                                                                                                          – Other related parties                                                                                 1 298 909      1 575 800

Operational leasing agreements                                                                                                                                                                                                                    1 357 052      1 964 450
The Company has entered into leasing agreements relating to diverse office equipment and warehouse equipment. Lease
agreements have also been signed for office premises, parking spaces and warehouse premises.
                                                                                                                                          Commitments to related parties comprise interest on a loan from a member of management and a loan including interest from a
                                                                                                                                          member of the Board. The interest on both loans is fixed at 5%. The interest is paid when the loan falls due. Accrued interest at
                                                                                                                                          year-end 2007 amounted to NOK 133 747.
Total future minimum payments related to the above leasing agreements are as follows:
                                                                                                         2007               2006
                                                                                                                                          In addition to the above, the Company also has an agreement with Aquazyme Technology AS (formerly Zonase AS) (AZT)
Payment due within 1 year                                                                                760 196            756 446       where the Company has an obligation to purchase the enzyme Zonase from AZT for NOK 4 357 000 plus VAT. Pursuant to the
Payment due between 1 and 5 years                                                                          48 750             93 750      agreement, delivery shall be in three equal parts where the first delivery shall take place as soon as the share issue is
Payment due later than 5 years                                                                                      0              0      implemented in December 2007. The delivery was made and paid for before 31 December and the remaining obligation to AZT
                                                                                                                                          corrected for accrued costs from AZT is NOK 2 252 708.
                                                                                                         808 946            850 196


The lease contracts for offices and warehouse contain a clause which allows for an adjustment of the rent in accordance with the
                                                                                                                                          21. Significant events after the balance sheet date
annual change in the consumer price index from Statistics Norway (SSB).
                                                                                                                                          Initial Public Offering:
19. Business integration                                                                                                                  21 December 2007 was the last day for investors to participate in connection with the Company’s Public Offering (IPO) ahead of
                                                                                                                                          listing on Oslo Axess. The Company’s goal was to issue a minimum 1 210 000 and maximum 4 000 000 new shares at a
                                                                                                                                          subscription price of NOK 9.0. The IPO was fully subscribed and a total of 1 238 000 new shares were issued. The deadline for
On 14 May 2007, Aqua Bio Technology ASA acquired 100% of the shares in Kilda Biolink AS, a company whose main activity
                                                                                                                                          payment for the shares was set at 2 January 2008.
involves research and development related to the enzyme Zonase. Aqua Bio Technology ASA has developed and marketed
cosmetic products based on this enzyme.
                                                                                                                                          A total of NOK 25.3 million was raised in connection with the two share issues in Q4. Of the subscription amount, NOK 11.6 was
                                                                                                                                          paid in December while the remaining NOK 11.1 will be paid in January 2008. Total costs in connection with the share issues
By merging these two companies together in the summer of 2007, the Aqua Bio Group has made it possible to achieve full
                                                                                                                                          and listing on Oslo Axess amounted to NOK 4.8 million.
commercial utilisation of Zonase via the Company’s own brands, in addition to license agreements and delivery agreements with
the owners of major global brands within the cosmetic industry.
                                                                                                                                          Listing on Oslo Axess:
                                                                                                                                          Following the IPO, Aqua Bio Technology ASA was listed on Oslo Axess on 10 January 2008. On the day of listing the total
The acquisition of Kilda Biolink AS was financed by the issue of 1 550 000 new shares to the previous owners of the acquired
                                                                                                                                          number of shares in the Company was 19 242 738 at a nominal value of NOK 0.20 per share.
entity, which gave them a total ownership share of 50% in the new company. Costs directly related to this transaction amounted
to NOK 205 000.
                                                                                                                                          Changes in the corporate management:
The acquired company did not contribute to increasing turnover since all internal sales were eliminated. For the period 14 May
                                                                                                                                          As a result of fast-growing interest for the Company's products on the international market, it is of major importance for the
2007 to 31 December 2007, but the acquired company contributed with a net loss of NOK 2.1 million. If the acquisition had
                                                                                                                                          Company to step up its international effort in sales and marketing. To accommodate the increased demands, the former CEO in
taken place on 1 January 2007, the consolidated sale would have remained unchanged at NOK 7.0 million, while the loss before
                                                                                                                                          the company, Einar O. Vangsnes, is appointed as Vice-president with responsibility for global marketing and sales with effect
allocations would have been NOK 14.5 million. These amounts are arrived at by using the consolidated accounting principles
                                                                                                                                          from 1 February 2008. At the same time, Arild Roar Rasmussen was appointed as new CEO. Rasmussen has broad experience
and by including the result from the subsidiary as well as total tax effects.
                                                                                                                                          from a similar position in Bolaks AS and from chairmanships and positions on the boards of several companies within
                                                                                                                                          aquaculture and related activities. Rasmussen was one of the initiatives takers behind Aqua Bio Technology AS, Bergen, and
A summary of the implemented Purchase Price Allocation (PPA) shows the following identified values:
                                                                                                                                          had been the CEO of this company until the merger of ABT and Kilda Biolink AS.
                                                                                                                         Identified
Amounts in NOK                                                                 Book value         Fair value            added value
                                                                                                                                          Share options:
Developed technology                                                                        0       65 795 000            65 795 000
                                                                                                                                          In January 2008, the Board of ABT awarded the company’s Director of Industrial R&D, Dag Oppen-Berntsen, and the
Patents and licences                                                                 869 981                    0           (869 981)
                                                                                                                                          company’s Finance Director, Ståle Bergum, options to acquirer shares in Aqua Bio Technology ASA. According to the
Stock                                                                                       0       30 000 000            30 000 000      agreement, Oppen-Berntsen and Bergum each have an option to acquire 150 000 shares in the company at a price of NOK
Other current assets                                                               1 736 090         1 736 090                        0   9.90 per share. The share options may be exercised in the period 1 January 2010 to 31 December 2011.
Other receivables                                                                    794 696           794 696                        0
Bank deposits                                                                        (44 249)          (44 249)                       0   New distribution agreement:
Total assets                                                                       3 356 518        98 281 537            94 925 019      On 15 February, the Company signed a new distribution contract with Uniapteka for distribution of the Company's products in
Equity capital                                                                     1 652 071        69 998 000            68 345 929      Poland. The first sales are expected to be implemented during the spring of 2008.

Deferred tax                                                                                0       26 579 090            26 579 090
Long-term liabilities                                                                900 000           900 000                        0
Short-term liabilities                                                               804 447           804 447                        0
Total equity and liabilities                                                       3 356 518        98 281 537            94 925 019



20. Related parties transactions


                                                                                                                           23                                                                                                                                     24
Annual Report for 2007
                                                                                                                                      Organisation
                                                                                                                                      Following the takeover of Kilda Biolink AS on 14 May 2007, the Group has strived to build up a robust organisation that can
About the Company
                                                                                                                                      further develop and utilise the possibilities inherent in the technology and products owned by the Group, with emphasis on
Aqua Bio Technology ASA (the Company) is an independent developer, manufacturer and seller of patented cosmetic
                                                                                                                                      sales and marketing as well as research and development. At 31.12.07 the Group had 10 employees representing 7.8 man-
ingredients and technology, as well as cosmetic products.
                                                                                                                                      labour years. There were no recorded absences due to illness in 2007. One person has been on 50% sick leave throughout
                                                                                                                                      2007.
The Company was established in 2004 with the aim of developing and marketing cosmetic products based on Zonase. In May
2007, the Company was merged with Kilda Biolink AS (formerly Aqua Bio Technology AS) with the Company acquiring all the
shares in Kilda Biolink AS against payment in shares. The latter was established in 2000 with the aim of developing and selling       Management team
the patented enzyme Zonase. Thus, from May 2007, all rights for the use of Zonase and appurtenant technology in skin care             At year-end, Einar Vangsnes was the Company’s CEO. Vangsnes relinquished his position on his own volition in order to
have been collected in the Company. In the following, the two companies in combination are referred as the Group.                     concentrate on building up the Group’s international sales starting 1 February 2008. Arild Roar Rasmussen, former managing
                                                                                                                                      director of Kilda Biolink AS, is appointed as new CEO. In 2007, the Group appointed a new Finance Director. Ståle Bergum has
The international cosmetic market for skin care products is estimated to be worth more than USD 100 billion. The market for           an MBA and comes from a position as Cash Manager in Alliance Unichem Norge AS. Before then he held a similar position in
products that are marketed as nature-based and/or as having physiological effects in addition to the pure cosmetic products is        Expert ASA.
estimated to be worth more than NOK 25bn per year. The Group operates as a supplier of raw materials and technology to this
market in addition to marketing a limited selection of its own branded products.
                                                                                                                                      Health and safety
                                                                                                                                      The Group maintains a strong focus on the employees’ health and safety. There has not been reported any injuries or fatalities
The Groups main activity is related to the patented enzyme Zonase, the patented technology Smids and the Group’s own skin
                                                                                                                                      as a result of the Group’s activity. Nor has there been reported any damage to property or equipment. The Board is of the
care products Zona and Kilda.
                                                                                                                                      opinion that the Group’s activities do not pollute the external environment, and emphasis will be placed on ensuring that future
                                                                                                                                      activities are organised in such a way that they are conducted on the basis of proper resource management with as little impact
Zonase is a non-toxic, stable and active enzyme that is isolated from hatching fluid from the production of salmon fry. The
                                                                                                                                      on the external environment as possible.
enzyme has the ability to dissolve dead skin cells without damaging the healthy subcutaneous cells. Zonase is therefore
extremely attractive as an active ingredient in skin care products.
                                                                                                                                      Gender parity
Smids is a technology that enables the tailoring of melting points for creams without altering water to fat ratios, and without the   The Group’s aim is to provide a workplace that offers total equality between men and women. The Group’s policy statement in
use of artificial additives. The technology therefore enables the development of creams with good cosmetic qualities and where        this area aims at ensuring that there is no differential treatment based on gender in issues such as pay, promotion and
nutrients can penetrate the skin.                                                                                                     recruitment. Working hour arrangements in the Group are in accordance with the various positions and are not related to
                                                                                                                                      gender. Women are encouraged to apply for vacant position in the Group.
                                                                                                                                      At year-end 2007 the Group employed 3 women and 7 men. The Board comprises 3 men and 2 women.
Strategic targets
The aim of the Group is to be a major international-oriented supplier of raw materials and technology to the skin care market
and related areas; respected for its exciting technology and excellent service to its customers. In addition, the Group will market   Corporate Governance
its own branded products through distributors in markets where such sales can be profitably developed.                                The Group aims at good Corporate Governance and the corporate management has introduced special rules for Corporate
                                                                                                                                      Governance in line with recommendations laid down in The Norwegian Code of Practice for Corporate Governance.
The Group’s main focus is therefore on the development and marketing of technology and active ingredients for use in skin             For further information refer to the separate statement concerning principles for Corporate Governance in this report.
care and other related areas. The Group’s ambitions within the area of branded products will have a more regional focus, and
will to a large extent be base don cooperation with already established suppliers to markets in the individual countries.
                                                                                                                                      Report on the Consolidated Financial Statement for 2007
                                                                                                                                      The Board is of the opinion that the Consolidated Financial Statement provides a true picture of the Group’s financial results
While the focus of the subsidiary up until the takeover in May 2007 was to investigate the fundamental properties of Zonase, as
                                                                                                                                      and position. The balance sheet was strengthened considerably in connection with the acquisition of Kilda Biolink AS. At year-
well as possible applications, the aim of the Company was to market its own branded products based on this technology – in
                                                                                                                                      end 2007 the Group had a total closing balance of NOK 112.5 million, an equity ratio of 77% and a low interest-bearing debt.
addition to Smids. This inhibited considerably the Company’s possibility to grow as it required extremely large investments, as
well as organisation, in order to build up an international brand within the cosmetic market. At the same time, the present
                                                                                                                                      Results
subsidiary through an agreement with the Company was prevented from selling raw materials direct to other cosmetic
                                                                                                                                      The Group had a turnover in 2007 of NOK 7.0 million, against NOK 7.5 million in 2006, while the result before tax was minus
manufacturers. This situation changed with the acquisition of the subsidiary, and the Group’s main strategy, therefore, is based
                                                                                                                                      NOK 20.8 million, compared with minus NOK 4.3 million in 2006. Both the turnover and result are affected by the work put into
on developing the sales of Zonase and Smids, including licensing the right to use the Group’s technology to major international
                                                                                                                                      acquiring Kilda Biolink AS and preparations for listing on Oslo Axess. The merger resulted in increased depreciation costs
producers of skin care products.
                                                                                                                                      totalling NOK 3.9 million on the technology that was valued in connection with the acquisition. A number of non-recurring
                                                                                                                                      depreciations were also implemented during the year on obsolete stock amounting to NOK 3.5 million. This related to a
The work to present and promote the Group’s technology and raw materials towards major international customers started in
                                                                                                                                      cancelled distribution agreement in Russia, and diverse special packaging for the launch of the Kilda series.
autumn 2007, and has stimulated considerable interest in the market. Several major international players have thus expressed
an interest to enter into cooperation with the Group. This work will now be continued with a view to sign contracts for the use of
                                                                                                                                      Research and development – This activity has mainly been conducted in the current subsidiary and in cooperation with Bergen
Zonase as an active ingredient in cosmetic products with a limited number of major international producers of skin care
                                                                                                                                      University and in part NTNU in Trondheim. The main aim of the work has been twofold: (i) To gather and supplement
products. Subsequently, it will be possible to expand the customer base with a view to making the raw material available to a
                                                                                                                                      documentation necessary in connection with the sale of Zonase to the cosmetic industry; and (ii) investigate and test other
broader market. However, this will require either developing a larger organisation for sales follow-up and technical support to
                                                                                                                                      properties of Zonase with a view to offering other areas of application than those already known.
customers, or working with existing partners that already have such services.

Parallel with this, the Group plans to launch its branded products through distributors in a limited number of markets, since the     In addition, work has been carried out on process development to ensure that the Company is in a position to be able to deal
Group does not have the resources to implement such sales itself. The work with preparing for a major launch of the Smids             with substantially increased demand in 2008, and especially in 2009.
technology internationally will also continue.                                                                                        The work with supplementing documentation in order to satisfy requirements from future customers is performed in accordance
                                                                                                                                      with advice and instructions from the customers, and is part of the preparations for the launching of new products that contain
Finally, work has started on seeking extended patent protection for the Group’s technologies so that these can cover new areas        Zonase. This work is expected to be concluded during the first half of 2008. The Group has identified several new potential
of application in addition to existing ones.                                                                                          areas of application for existing technologies, and patent applications are under preparation in these areas. These must be
                                                                                                                                      completed before any further information can be divulged.

Marketing and distribution agreements                                                                                                 Financing
The Group has entered into marketing and distribution agreements for its branded products in Norway, Sweden, Finland,                 In 2007, the Company implemented four share issues corresponding to an increase in nominal share capital from NOK 1 500
Germany, Poland and South Africa. While the sale of especially Zona is well-established in Norway and Sweden, sales in                000 to NOK 3 600 948. In January, the payment of a nominal NOK 50,000 in new share capital was recorded. This increase is
Germany and South Africa are at an early stage, and launching in Poland is planned for the first half of 2008. In contrast to         attributed to payments made in 2006 that were not registered with the Brønnøysund Register Centre before January 2007.
Norway and Sweden, the pharmacy will be the most important sales channel in these countries, where the main focus will be             At an extraordinary general meeting on 14 May 2007 it was decided to implement a targeted issue corresponding to 1,550,000
on Zona. Thus, Zona is now available on the market in 5 countries, and the launch in Poland in the coming months will result in       aimed at the shareholders in Kilda Biolink AS (formerly Aqua Bio Technology AS) as payment for the acquisition of all the
the product being available in country number 6. Per today, Kilda Skindiver is only sold in Norway and Sweden.                        shares in the said company. This involves a doubling of the total shares and share capital in the Company.

Annual Report 2007 – Aqua Bio Technology ASA                                                                                          In September, with authorisation from the AGM, the implemented a private placement of 935,350 shares ate NOK 6 per share
The Group’s aim is to successively increase our distribution to include more countries, and talks with various prospective            aimed at nominated shareholders as part of a recapitalisation of the company, including the settlement of some old debt. On 30
distributors are currently under way. No agreements have yet been signed for the sale and distribution of raw materials. The          November, a private placement of 1,569,388 shares was implemented at NOK 9 per share aimed at new and existing
Group aims initially to conduct direct negotiations with a limited number of selected international industrial customers.             nominated shareholders as part of the preparations for listing the company’s shares on Oslo Axess.
And finally, a public issue of subscribed shares was implemented in December at the same price of NOK 9 per share. This
capital increase was first registered after the New Year as the deadline for payment for investors was set for primo January.           Sandefjord, 31 December 2007 / 26 March 2008
Thus, on 1 January 2008, the company’s share capital stood at NOK 3 600 948 divided by 18,004,738 shares. In addition, 93
shareholders had subscribed to a further 1,238,000 shares that were first registered after the New Year. Including these
shares, therefore, the Company has 19,242,738 shares at NOK 0.20 a share corresponding to a total share capital of NOK
3 848 547.60.

Going concern
The Board confirms that the annual financial statements are prepared on the assumption that the Group satisfies the
requirements for a going concern.

Financial and operational risk
The Group’s objective and strategy is to build up an international enterprise for the production and sale of active ingredients to
industry within the skin care area and related fields, as well as develop and market a limited selection of branded products
through distributors in selected markets. The Group faces a number of financial and operational risk factors, and some of these
are beyond the company’s control.

Operational risk factors
Contractual risk. While the Group’s revenues are linked to a limited number of agreements with third parties the Group’s
dependency on these third parties is considerable, and any breaches of agreement or reduced activity by a contractual partner
can affect the Group’s earnings. The Group is trying to safeguard against this by linking contracts that offer some kind of
exclusivity or preferential rights to minimum requirements for purchase or payment. In addition, the Group aims to increase over
time the total number of contractual partners in order to be less dependent on a few.
Technological risk. The Group is of the opinion that the technology and products in the Group’s possession are extremely
attractive and competitive in the market. However, in a world where development is running at an ever-increasing pace, and
where huge sums are invested in the development of new technology and products, a situation could arise where new
technology radically changes the market assumption for the Group’s products and technology. This can result in a reduction in
the sales volume, or make it necessary to reduce the prices in order to maintain the market. Thus, the Group aims to develop
new areas of application for existing technologies and ingredients, as well as identify new technologies and substances that
offer substantial international potential within the areas the Group is already active, and thus be less dependent on just a small
number of products.

Financial risk factors
The Group’s activities involve various types of financial risk:
Currency risk. Since most of the Group’s future revenue is expected to be in international currency, while a considerable
proportion of the Group’s costs will be in Norwegian kroner (NOK), the Group will be exposed to fluctuations in exchange rates.
The Group will therefore continuously assess the need for implementing measures for currency hedging. At the same time, and
to the extent this is possible, the Group will include clauses in long-term delivery agreements that will enable the Group to seek
compensation for extraordinary currency fluctuations.
Interest risk. The Group currently has no interest-bearing debt. However, from time to time, it might be necessary to seek bank
financing in order to cover the demand for capital. This would involve the Group incurring an interest risk. The Group will at all
times assess this risk, and implement any measures necessary to safeguard the Group’s interests.
Credit risk. All credit sales involve a risk for loss as a result of the customer’s inability to pay, currency restrictions, etc. Per
today, the Group has a few customers that mainly pay within 30 days following delivery. In connection with the signing of new
contracts, the Group will attempt to include an element of cash payment or demand for bank guarantees in order to safeguard
the company against credit loss. With an increasingly internationalised operation where it is not always possible to implement
requirements for bank guarantees or advanced/cash payment, the Group would incur an increased credit risk. In this context,
the need for safeguarding receivables, possibly in combination with factoring in order to secure the financing of quick growth,
will be assessed.
Liquidity risk. The Group has no outstanding debt items of any consequence that would require substantial liquid payments. It is
nevertheless clear that if sales are considerably poorer than budgeted, any available liquidity will be quickly exhausted and the
Group would have to resort to bank financing. In this connection, an application has been granted for increasing the Group’s
overdraft facility from NOK 2 million to BOK 5 million. This will be of assistance in the event of expected sales being delayed.

Outlook
The reception given to the Group’s technology and raw materials after being launched internationally for the first time in autumn
2007 has confirmed the Group’s belief in the possibility of building up considerable sales of Zonase to the international
cosmetic industry. The Group expects, therefore, to be able to enter into concrete negotiations with major international
customers during the first half of 2008. If so, this would result in considerable deliveries from and including 2009, as well as
possibly financing research activities already in the current year.
The work carried out to document Zonase’s properties even further offers possibilities for new areas of application for this
technology.
Recently signed distribution agreements for Zona are expected to result in increased sales during the year.

Allocation of the result for the year
The Board proposes the following allocation of the annual result in Aqua Bio Technology ASA:
In 2007, Aqua Bio Technology ASA had a deficit of NOK 11.4 million. The Board proposes that this amount is transferred to
uncovered loss.

The companies have no distributable reserves.

In 2007 the Group had a deficit of NOK 12.0 million.
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                               ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


Appendix 4: Aqua Bio Technology’s Annual Report for 2008 (IFRS) with Auditor’s Report   Contents
(Translated version)
                                                                                        The Board of Director’s Report                                 3-6

                                                                                        The Group:
                                                                                        Consolidated income statement                                    7


        CONSOLIDATED
                                                                                        Consolidated balance sheet                                       8
                                                                                        Consolidated cash flow statement                                 9
                                                                                        Consolidated cash flow statement                                10
                                                                                        Notes                                                        11-28

     FINANCIAL STATEMENT                                                                The Company (parent):
                                                                                        Income statement                                               29

             2008                                                                       Balance sheet
                                                                                        Changes in company equity
                                                                                        Cash flow statement
                                                                                                                                                    30-31
                                                                                                                                                       32
                                                                                                                                                       33
                                                                                        Notes                                                       34-49

                                                                                        Auditor’s report                                                 50
                                                                                        Corporate governance                                          51-53
                                                                                        Presentation of the Election Committee and Board of Directors    54
            AQUA BIO TECHNOLOGY ASA




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ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

ANNUAL REPORT 2008 - AQUA BIO TECHNOLOGY ASA                                                                                  Organisation
                                                                                                                              As a result of the decline in sales revenues in 2008, the Board introduced a number of substantial cost-reducing
                                                                                                                              measures and lay-offs. The number of employees has been reduced during the course of the year from five full-time
Description of the company                                                                                                    and six part-time to three full-time and one part-time at the turn of the year 2008/2009. Costs and organisational
Aqua Bio Technology ASA (The Company) is an independent developer, manufacturer and seller of patented                        structure will be held at the lowest possible level until the Company enters into a contract for the sale of Zonase, but
cosmetics ingredients and technology. The Company’s head office is in Bergen.                                                 this notwithstanding such that we have sufficient capacity to ensure efficient administration and capacity to a maintain
                                                                                                                              our focus on marketing activities.
The Company was established in 2004 and owns 100 % of the subsidiary Kilda Biolink AS (previously Aqua Bio
Technology AS). The two companies are jointly referred to in the following as the Group, and own all rights to the            As off 31.12.08 the company had four employees. Absence through illness was negligible in 2008.
application of Zonase and the associated technology within the field of skin treatment. All activities in connection with
the production and sale of finished goods and associated rights were sold at the start of the fourth quarter of 2008, and     Management
are discussed in detail under “Strategic direction”.                                                                          At his own request Einar Vangsnes vacated the position of Managing Director on 01.02.2008 in order to concentrate
                                                                                                                              on the task of building up the Group’s sales internationally.
The international market for cosmetic skin treatment products is estimated to be in excess of USD 100 billions. The
marked for products profiled as based on natural ingredients and/or also have functional effects in addition to the           Arild Roar Rasmussen, who was previously Managing Director of the subsidiary Kilda Biolink AS, was engaged as new
purely cosmetic is estimated to be more than USD 25 billions per annum. The future activities of the group will be            Managing Director of the company with effect from the same date.
focussed solely on operating as a supplier of ingredients and technology to this market on the basis of the patented
enzyme Zonase and the patent applied for technology Smids.                                                                    Health and Safety
                                                                                                                              The Group focuses strongly on the health and safety of its employees. No injuries or loss of life caused by the Group’s
Zonase is a non-toxic, stable and active enzyme that is isolated from the fluids produced by hatching salmon eggs.            activities were registered during the course of the year. Neither was any damage to property or reported during the
The enzyme has the ability to loosen dead skin cells without harming the new cells below.                                     same period. The Board is of the opinion that the Group’s activities do not pollute the external environment, and
                                                                                                                              emphasis will be placed on arranging future internal activities so that these are conducted on the basis of good
Smids is a technology that enables the melting point of creams to be tailored without altering the ratio of water and fats    resource management with minimum impact on the external environment.
in the cream, and without the use of artificial additives. The technology thus enables the development of creams with
good cosmetic characteristics.                                                                                                Gender equality
                                                                                                                              The Group’s objective is to be a workplace of equal opportunity for both genders, and will avoid any and al forms of
The last two years have been demanding for the company. Sales of creams have declined and the commercialisation               discrimination based on gender in matters such as wages, promotion, recruiting and so forth. The Group’s working
of Zonase as an ingredient to the cosmetics industry has proved to take longer than originally envisaged due to               hours arrangements are dependent on the demands of the various positions and are not gender dependent. Women
amongst other factors comprehensive application testing by customers. During the course of 2008 and early 2009 we             will be encouraged to apply for any positions advertised.
have progressed far in this work, and the Company has also seen a considerable level of positive interest in the
Company’s technology compared to previous areas of application.                                                               Of a total of 4 employees in the Company at the close of 2008 one was female. The Board of Directors has 3 male and
                                                                                                                              2 female members.
As sales of cosmetics have declined the Company’s liquidity has also been weakened. The financial crisis has also
placed additional pressure on liquidity. The difficult situation with regard to liquidity has also resulted in that the       Corporate Governance
Company has fallen behind in its commitments. The Company has informed the market of the need for additional                  The Group aims at good corporate governance and management and has introduced separate rules for Corporate
capital, and capital was recently increased (April 2009) in combination with a voluntary debt settlement arrangement          Governance in accordance with the recommendations laid down in Norsk Eierstyring og Selskapsledelse. In
with the Company’s creditors.                                                                                                 connection with the recent increase in capital the General Meeting has adopted a proposal to deviate from the
                                                                                                                              guidelines covering the payment of fees to Board and that the members of the Board can enter into an options
Strategic direction                                                                                                           programme for the company. For further details please refer to the separate document on Corporate Governance and
The Company’s strategy and activities are now, as a result of the decision reached in October 2008 to sell the brand          Management in this Annual Report.
names Zona and Kilda Skindiver, no concentrated on the development and marketing of the two ingredients Zonase
and SMIDS to the international cosmetics and personal care industry. Both products originate from Norwegian                   The Annual Accounts
research environments. The sales resulted in that sales of cosmetics ceased during the third quarter of 2008.                 The Board is of the opinion that the annual accounts provide a true picture of the Group’s result and position.

The decision also demanded a considerable degree of downsizing and restructuring of the Company’s organisation,               Profit/Loss for the Year
which will now concentrate on strengthening the Company’s sales and marketing work and developing our patents,                The Company’s turnover in 2008 was NOK 4.8 millions compared to NOK 7.0 millions in 2007, while the result before
technology and product development of Zonase and SMIDS. Other activities, including production, will be purchased             tax was negative with a deficit of NOK 49.9 millions for the Company compared to a deficit of NOK 15.8 millions in
from other companies.                                                                                                         2007.

The Group’s objective is become a major, internationally oriented supplier of raw materials and technology to the skin        Group turnover for 2008 and 2007 is the same as Company turnover. The result before tax for the Group was a deficit
care market and associated areas, recognised and respected for its excellent innovative technology and good                   in 2008 of NOK 49.2 millions compared to NOK 20.8 millions in 2007.
professional dialogue with its customers.
                                                                                                                              The Group’s profit/loss for 2008 is encumbered by a write down of intangible assets of NOK18.0 millions. Further, both
The work of introducing the Group’s technology and raw materials to major international customers commenced during            turnover and result for 2008 for the Company and the Group show the effect of the turn-down is sales of cosmetic
the autumn of 2007, and has attracted a great deal of interest in the market place. Several major international               creams in the first 3 quarters and the sale of the products and accompanying rights in the final quarter. Total book
companies have notified interest in entering into co-operative agreements with the Company. This work will now be             losses related to the sale of the cosmetics products and accompanying rights amount to MNOK 9.3 of which total loss
bolstered by increased focus on sales and marketing by our own team as well as the establishment of agreements on             on the sale of brand names was MNOK 6.2 and compensation in connection with brand name infringement is entered
distribution and sales with well-established and respected international partners with solid customer portfolios.             s a cost of MNOK 3.1.




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ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

The effect on costs of reductions in staff and discontinuance of contracts in connection with the move from Sandefjord        levels of activity on the side of one of the other parties and other similar factors may have an effect on the Group’s
to Bergen, will not show a positive accounting effect on the cost side until 2009.                                            earnings. One will attempt to alleviate this by ensuring that any contract that provides a third party with an exclusive
                                                                                                                              right or other advantage is premised by a minimum requirement for purchases or payments. Further, the Group will
The Balance Sheet                                                                                                             strive to increase the number of contracting parties over time thus ensuring a lower level of dependence on a small
The Company’s book assets as of pr 31.12.08 were NOK 63.6 millions and book shareholder’s equity was NOK 531                  number of partners.
millions. At the close of 2008 the Group’s balance sheet total was NOK 75.5 millions, an equity ratio of 81 % and no
interest bearing liabilities.                                                                                                 Technological risks. The Group firmly believes that the technology and products the Group owns the rights to are
                                                                                                                              extremely attractive and competitive in the market place. In a world where development incurs at an ever-increasing
As part of this year’s assessment of the balance values the Board has chosen to write down the Group’s intangible             pace, and where large sums are invested in the development of new technology and new products, it is nonetheless
assets linked to the developed technology Zonase by NOK 18.0 millions as a result of that the sale of Zonase was              possible that a situation could arise where new technology radically changes the market premises for the Group’s
rescheduled in relation to the expected cash flow at the close of 2007. The write down was executed on the basis of           products and technology. This may result in a reduction on sales volumes or make it necessary to reduce prices in
the discounted cash flows based on a delay in presentation to the market. A low positive cash flow from activities            order to maintain market shares. The Group is therefore researching the potential for developing new areas of use for
(EBITDA) is anticipated in the prognosis for 2010.                                                                            the current technologies and ingredients, as well as identifying new technologies and substances with a high
                                                                                                                              international potential within the areas in which the Group is currently active with the aim of lessening future
Research and development                                                                                                      dependency on a restricted number of products.
These activities have for the most part been conducted in the subsidiary and otherwise in co-operation with the
University of Bergen and NTNU in Trondheim. The main emphasis of the work has been on supplementing the                       Financial risk factors
documentation necessary in connection with the sale of Zonase to the cosmetics industry, and the investigation into           The Group’s activities are exposed to a number of financial risks:
and testing of other characteristics of Zonase with the aim of offering other areas of use than those already known.
Parallel to these activities external safety tests have been carried out based on branch and customer standards as a          Currency risk. In that the major part of the Group’s future income is expected to be generated in foreign currencies,
step in the preparations for the launch of new products containing Zonase. The Group has identified a number of               while at the same the major part of the Group’s costs will be in NOK, the Group will be exposed to fluctuations in
potential new areas of use for the current technologies and patent applications are being prepared for these.                 exchange rates. The Group will therefore assess the need to implement currency-hedging measures at any given time
                                                                                                                              on an ongoing basis. One will simultaneously, to the degree this is possible, included clauses in long-term contracts
Financing                                                                                                                     that provide the possibility to claim compensation for currency fluctuations outside the generally accepted norms.
In December 2007 the Company implemented a public subscription at the subscription price of NOK 9,00 per share
that brought in NOK 11.1 millions. The share issue was registered in January 2008. In addition to this the Company            Interest risk. The Group has no current interest-bearing liabilities. It may however be necessary from time to time to
had an overdraft facility of NOK 2 millions up to October 2008. This was discontinued after the sale of cosmetic              take up bank financing in order to cover capital requirements. This will mean that the Group can incur an interest risk.
products. A shareholder loan of NOK 1.047 was repaid from the revenues from the public emission.                              The group will assess this risk on an ongoing basis and will implement the measures necessary to secure the Group’s
                                                                                                                              best interests.
No increase in capital was implemented in 2008. At the close of 2008 the Company had 19 242 738 shares á NOK
0.20 per share, equalling total share capital of NOK 3 848 547.60. A capital increase was implemented in 2009 which           Credit risk. All credit sales carry with them the risk of loss due to the lack of ability to pay incurring in the customer
is referred to under “Continued operation”.                                                                                   portfolio, currency restrictions etc. In connection with the signing of new agreements the Group will make every effort
                                                                                                                              to include an element of cash payment or a demand for a bank guarantee to secure the Group against such credit risk
Continued operation                                                                                                           losses. With an increasingly international field of activities, where it may not always be possible to gain acceptance for
In March 2009 the Board decided to implement a capital increase (private cash issue) combined with debt settlement            a demand for a bank guarantee or prepayment/cash payment, the Group may incur an increased credit risk. In
negotiations with the Group’s creditors with claims in excess of NOK 10,000.- in order to secure a financial basis for        connection with this it will be necessary to assess securing our outstandings, where necessary in combination with
the Company’s continued operation. The Board’s decision included the transfer of the claim against Kilda Biolink AS to        factoring in order to ensure financing of rapid growth.
Aqua Bio Technology ASA, dependent on acceptance by the creditor.
                                                                                                                              Liquidity risk: Until the Company enters into contracts for the sale of Zonase to a major international cosmetics
On 16 April 2009 the General Meeting adopted the proposal for the capital increase. New shares were subscribed in             company, the Company has no income-generating activities. During this phase the Group must base all activities on
the private cash placing for NOK 8.3 millions and debts were converted to shares equal to NOK 2.1.                            financing through shareholder’s equity and seek funding from public and/or private sources for R&D funds for projects
                                                                                                                              where this may apply.
Of the new capital NOK 2.2 millions will be used to settle outstandings with creditors and employees without delay,
while NOK 0.97 millions of creditors claims are due for settlement in two years (1.4.2011). Net new operating capital         Future prospects
after payment of creditors and advisors that have assisted the Company in the process is NOK 4.9 millions. It is the          The reception given to the Group’s technology and raw materials when these were presented for the first time
opinion of the Board that the Company has received sufficient new capital through the capital increase to be able to          internationally in the autumn of 2007, and the response we have received through the market contacts we have
continue operating for the next 15 months, a period that is deemed to be sufficient to establish sales contracts with a       developed during 2008, have confirmed the Board’s belief in the market potential and the potential for developing an
resulting positive cash-flow.                                                                                                 interesting biotechnology company with its basis in Zonase and SMIDS. The Group anticipates entering into concrete
                                                                                                                              negotiations with major international customers during 2009. Success here will ensure major deliveries from and
The Board confirms that on the basis of the above that the accounts are submitted under the premise of continued              including 2010. The work done thus far in documenting Zonase’s characteristics is nearing finalisation and shows the
operation.                                                                                                                    potential for new and exciting areas of use for the technology.

Financial and operational risks                                                                                               Allocation of profit/loss for the year
The Group’s objectives and strategy is to develop internationally oriented activities for the production and sale of active   The Board proposes the following distribution of profit/loss for the year foe Aqua Bio Technology ASA:
ingredients to the skin care sector and related segments in industry. The Group is faced with a number of financial and
operational risk factors, with some of these outside the control of the Company.                                              The Company’s deficit in 2008 was NOK 44 645 586. The Board proposes that the deficit for the year is written to
                                                                                                                              uncovered losses. The Company has no free shareholder’s equity.
Operational risk factors
Contractual risks. As long as the Group’s revenues are linked to a limited number of contracts/agreements with third          The Company’s deficit in 2008 was NOK 36 088 681.
parties, one will be in a position of dependency with the said contractual partners, and breaches of contracts, reduced

                                                                                                                          5                                                                                                                              6
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA       ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


Sandefjord / Bergen, 29 April 2009               Consolidated income statement
                                                 NOK                                                                                                As of 31 December
                                                                                                                                       Note        2008           2007
                                                 Revenues                                                                              2, 5,19     4 783 375      7 037 989
                                                 Cost of sales                                                                           9        (4 695 922)    (6 909 362)
                                                 Gross profit                                                                                         87 453        128 627
                                                 Payroll costs                                                                           15       (4 513 439)    (5 183 316)
                                                 Depreciation                                                                           6, 7      (8 370 685)    (5 816 264)
                                                 Write downs                                                                             7       (18 000 000)                -
                                                 Other sales and administrative expenses                                               18,19     (18 252 517)    (9 616 075)
                                                 Operating result                                                                                (49 049 193)   (20 487 027)


                                                 Financial income                                                                      2, 16          93 458        106 317
                                                 Financial costs                                                                       2, 16       (284 263)      (414 775)
                                                 Net financial income/(costs)                                                                      (190 805)      (308 458)


                                                 Profit/(loss) before tax                                                                        (49 239 998)   (20 795 485)
                                                 Taxes                                                                                   14      (13 151 317)    (8 821 121)
                                                 Profit/(loss) for the year                                                                      (36 088 681)   (11 974 365)



                                                 Earnings per share
                                                 – ordinary                                                                              17            (1,88)           (0,92)
                                                 – diluted                                                                               17            (1,88)           (0,92)



                                                The accompanying notes are an integral part of the consolidated financial statement.




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ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                        ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA



 Consolidated balance sheet                                                                                                       Consolidated statement of changes in shareholders’ equity

 NOK                                                                                              As of 31 December               NOK                                                          Note                     Equity attributed to the Company’s
                                                                                       Note       2008           2007                                                                                                             shareholders
 ASSETS                                                                                                                                                                                                                       Share                           Total equity
 Fixed assets                                                                                                                                                                                              Share            premium        Loss carried
 Tangible fixed assets                                                                  6          383 338        425 052                                                                                  capital           reserve         forward
 Intangible assets                                                                     7, 19    38 460 187     68 913 946         Equity as of 1 January 2007                                                 150 000        15 270 000      (6 381 451)        9 038 550
                                                                                                38 843 525     69 338 998         Profit/(loss) for the year                                     5                      -              -    (11 974 365)      (11 974 365)

 Current assets                                                                                                                   Proceeds from share issue                                     11         3 450 948         88 375 907                   -    91 826 855
 Inventories                                                                           9, 19    33 240 361     37 128 911         Costs related to share issue                                                     -         (2 015 891)                  -     (2 015 891
 Trade and other receivables                                                            8        3 222 488      4 640 177         Equity as of 31 December 2007                                            3 600 948        101 630 016     (18 355 815)       86 875 149
 Cash and cash equivalents                                                              10         147 190      1 366 887
                                                                                                36 610 038     43 135 975         Equity as of 1 January 2008                                              3 600 948        101 630 016     (18 355 815)       86 875 149
 Total assets                                                                                   75 453 563    112 474 972         Profit/(loss) for the year                                     5                      -              -    (36 088 681)      (36 088 681)
                                                                                                                                  Proceeds from share issue                                     11            247 600        10 894 400                   -    11 142 000
 EQUITY                                                                                                                           Costs related to share issue                                                      -        (1 192 262)                  -    (1 192 262)
 Equity attributed to the Company’s shareholders                                                                                  Share-based options                                                                   -              -         655 092          655 092
 Share capital                                                                          11       3 848 548      3 600 948         Equity as of 31 December 2008                                            3 848 548        111 332 154     (53 789 402)       61 391 299
 Share premium reserve                                                                         111 332 154    101 630 016
 Loss carried forward                                                                          (53 789 402)   (18 355 815)
                                                                                                                                 The accompanying notes are an integral part of the consolidated financial statement.
 Total equity                                                                                   61 391 299     86 875 149


 LIABILITIES


 Non-current liabilities
 Deferred tax                                                                           14       3 822 690     16 974 013
 Loans                                                                                  13       3 000 000               -
 Other long-term liabilities                                                           13,19     3 080 000      1 262 506
                                                                                                 9 902 690     18 236 519
 Current liabilities
 Trade payables                                                                         12       2 499 762      4 625 923
 Loans                                                                                  13                -              -
 Other current liabilities and obligations                                                       1 659 812      2 737 382
                                                                                                 4 159 574      7 363 304
 Total liabilities                                                                              14 062 264     25 607 714
 Total liabilitites and equity                                                                  75 453 563    112 474 972


The accompanying notes are an integral part of the consolidated financial statement.



Sandefjord / Bergen, 31 December 2008 / 29 April 2008




                                                                                                                             9                                                                                                                                               10
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                          ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA



 Consolidated cash flow statement - Group                                                                                           1. General information

 NOK                                                                                               As of 31 December                Aqua Bio Technology ASA comprises Kilda Biolink AS in Sandefjord and Aqua Bio Technology ASA in
                                                                                                                                    Bergen. Kilda Biolink AS originally developed branded cosmetic goods based on functionally patented
                                                                                       Note        2008           2007
                                                                                                                                    ingredients, while Aqua Bio Technology AS developed and patented the enzyme Zonase for use in
 Cash flows from operating activities
                                                                                                                                    cosmetics.

 Result before tax                                                                       5      (49 239 998)   (20 795 485)         The cosmetics business was sold in Q4 2008 and the company’s strategy now is to focus on the
 Depreciations                                                                          6,7       8 370 685      5 816 264          development and marketing of Zonase and SMIDS to major international cosmetics companies.
 Write-downs                                                                             7       18 000 000
 Changes in stocks                                                                                3 888 551      1 968 963          The Company is an ASA – a public limited company - based in Norway with registered offices at
 Losses on the sale of operating assets                                                19,21      6 168 604               -         Framnesveien 7, Sandefjord .
 Change in trade and other receivables                                                            1 417 689      (442 463)          The Company is listed on Oslo Axess.
 Change in accounts payable                                                                      (2 126 161)     1 066 612
 Net cash flow from operating activities                                                        (13 520 630)   (12 386 110)         The consolidated financial statement was authorised for issue by the Board of Directors on 29 April 2009.


 Cash flow from investing activities                                                                                                2. Summary of significant accounting principles
 Acquisitions of fixed assets                                                           6, 7     (2 043 821)    (1 945 193)
                                                                                                                                    The principal accounting policies applied in the preparation of this consolidated financial statement are set
 Net cash flow from investing activities                                                         (2 043 821)    (1 945 193)         out below. These policies have been consistently applied to all the years presented, unless otherwise stated.


 Cash flows from financing activities
 Proceeds from issues of ordinary shares                                                11        9 949 738     19 028 919          2.1 Basis of preparation
 Share-based options                                                                                655 092                         The consolidate financial statement of Aqua Bio Technology ASA is prepared in accordance with International
 Taking up (repayment) of loans                                                        13, 19     4 817 494     (1 816 944)         Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting
 Change in other short-term debt                                                        13       (1 077 569)         3 278          Standards Board (IASB) as stipulated by the EU.
 Cash adjustments relating to acquisition of Kilda Biolink AS                                              -        44 249          The consolidated financial statements are prepared according to the historical cost principle.

 Net cash flow from financing activities                                                         14 344 755     17 259 502
                                                                                                                                    The following are standards and interpretations that have been approved but not implemented on
                                                                                                                                    the balance sheet date:
 Change in cash and cash equivalents and utilised drawing rights                                 (1 219 697)     2 928 199
 Cash and cash equivalents and utilised drawing rights at 1 January                     10        1 366 887     (1 561 312)         Amendment to IFRS 2 Share-based Payment: Vesting conditions and cancellations
 Cash and cash equivalents and utilised drawing rights at 31 December                   10          147 190      1 366 887          This change to IFRS 2 provides clearer guidance on what are vesting conditions and what are not. It also
                                                                                                                                    regulates the accounting treatment of rights in share option arrangements that are cancelled when
                                                                                                                                    conditions other than vesting conditions are not fulfilled. The new requirements come into effect on 1
The accompanying notes are an integral part of the consolidated financial statement.
                                                                                                                                    January 2009. The Group plans to implement the new requirements with effect from 1 January 2009.

                                                                                                                                    IFRS 3 (revised) – Business Combinations
                                                                                                                                    In relation to the existing IFRS 3, the revised standard involves certain changes and clarifications about the
                                                                                                                                    application of the acquisition method. Significant amendments include inter alia goodwill with a gradual
                                                                                                                                    acquisition, minority interests, and conditional payment and acquisition costs. The effective date of these
                                                                                                                                    revisions is set for 1 July, but IFRS 3 (R) is still not approved by the EU. The Group plans to apply IFRS 3
                                                                                                                                    (R) with effect from 1 January 2010.

                                                                                                                                    IFRS 8 – Operating Segments
                                                                                                                                    IFRS 8 replaces IAS 14 – Segment reporting. The standard requires the Group to use a managerial
                                                                                                                                    approximation for the identification of segments. In general, the information to be reported should be the
                                                                                                                                    same as that used by the management to evaluate segmental results and determine how resources should
                                                                                                                                    be allocated to the segments. IFRS 8 requires details about what the preparation of segment information is
                                                                                                                                    based on, and from which type of products and services each segment draws revenues. IFRS 8 is effective
                                                                                                                                    from 1 January 2009. The Group will apply IFRS 8 with effect from 1 January 2009.

                                                                                                                                    IAS 1 (revised) – Presentation of Financial Statements
                                                                                                                                    The revised standard includes changes in the financial statements, particularly the equity statement, and
                                                                                                                                    introduces a Statement of Comprehensive Income (a statement of non-owner transactions showing the
                                                                                                                                    total amount of recognised income and expense. IAS 1 (R) is effective from 1 January 2009. The Group will
                                                                                                                                    apply IAS 1 (R) with effect from 1 January 2009.



                                                                                                                              11                                                                                                                     12
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                    ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

 IAS 27 (revised) – Consolidated and Separate Financial Statements                                                                           o    The reference to IAS 37 concerning conditional obligations is removed.
 In relation to the present IAS 27, this revised standard provides more guidance about the accounting                              • IAS 20 Accounting for Government Grants and Disclosure of Government Assistance: Future loans
 treatment of changed ownership interest in a subsidiary and disposal of an investment in a subsidiary. It                             from the state at an interest rate lower than the market rate are not exempt from the requirement
 also amends current rules related to the distribution of loss between the minority and the majority in that a                         to find an estimated rate. The difference between the loan received and current value shall be
 deficit shall be charged to the minority even though it is negative. IAS 27 (R) is set to come into effect on 1                       accounted as a government grant.
 July 2009 but is still not approved by the EU. The Group plans to apply IAS 27 (R) with effect from 1                             • IAS 28 Investments in associates and IAS 31 interests in joint ventures: Change in specific note
 January 2010.                                                                                                                         information if such investments are recognised at fair value in accordance with IAS 39.
                                                                                                                                   • IAS 36 Impairment of assets: Specific information shall be provided in the notes in connection with
                                                                                                                                       depreciation tests when discounted future cash flows are used to estimate fair value less sales
 Amendment to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial                                           costs.
 Statements – Puttable Financial Instruments                                                                                       • IAS 38 Intangible assets: Expenses relating to advertising and sales promotions shall be taken to
 The amendment in IAS 32 means that some sales options shall be classified as equity. The change in IAS                                cost at the date the goods are made available for companies or when the service is received.
 1 applies to the requirement for notes to the financial statements. The date set for IAS 32 and IAS 1 taking                      • IAS 39 Financial instruments: Recognition and measurement:
 effect is 1 January 2009 but the requirements have still not been approved by the EU. The Group plans to                                    o    The change in the use of a derivative, with identification of the derivate as a hedging
 apply the amended versions of IAS 32 and IAS 1 with effect from 1January 2010.                                                                   instrument or with cancellation of hedging, shall nit be regarded as a reclassification.
                                                                                                                                                  Derivatives can therefore be included in or removed from the category “fair value with
 Amendment to IAS 39 Financial Instruments; Recognition and Measurements – Eligible Hedged                                                        value changes over the result” after first-time recognition.
 Items                                                                                                                                       o    With the recalculation of amortised cost according to IAS 39.AG8 for an instrument that
 The amendment to IAS 39 involves a clarification of the rules where a financial instrument (hedged item) is                                      is or has been an object for fair value hedging, an effective interest rate shall be
 hedged in accordance with selected risks or components of cash flows. The approved amendments                                                    applied that accounts for the effect of hedging, and not the original effective interest
 primarily give further guidelines for the hedging of unilateral risk (hedging with options) and hedging of                                       rate.
 inflation risk, but also clarify the guidelines that the selected risks and cash flows must be identifiable and                             o    The reference to ”segment” is removed in relation to the identification and
 reliably measureable. The date set for implementation of the amendment to IAS 39 is 1 July 2009, but the                                         documentation of a hedging situation
 amendment is still not approved by the EU. The Group plans to apply the amended version of IAS 39 with
 effect from 1 January 2010.                                                                                                  None of the changes will result in significant changes in the Group’s application of accounting
                                                                                                                              principles or notes to the financial statements.
 IFRIC 13 – Customer Loyalty Programmes
 The interpretation deals with how loyalty programmes that an entity has with its customers as a reward for                   Exercising professional judgement
 previous purchases, as well as incentives for further purchases, shall be recognised and measured in the                     The preparation of financial statements in conformity with IFRS requires the use of estimates. It also
 financial statements. The interpretation was to have been effective from 1 July 2008 but had not been                        requires management to exercise professional judgement in the process of applying the Company’s
 approved by the EU at that point in time. The interpretation is now approved by the EU for the 2009                          accounting policies. The areas involving a higher degree of judgement or complexity or areas where
 accounting year. The Group will apply IFRIC 13 with effect from 1 January 2009.                                              assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

 IFRIC 17 – Distributions of Non-cash Assets to Owners                                                                        2.2 Consolidation basis
 The interpretation deals with the accounting treatment of payments to owners that are settled in assets                      Subsidiaries
 other than cash. The interpretation is set for implementation with effect from 1 July 2009, but has still not                Subsidiaries are all entities (including enterprises with restricted object) where the Group has a controlling
 yet been approved by the EU. The Group will apply IFRIC 17 with effect from 1 January 2010.                                  influence over the entity’s financial and operational strategy, normally through ownership of more than 50 per
                                                                                                                              cent of voting shares. Determination of whether a controlling influence exists includes the effect of potential
 The Group expects that the implementation of IFRS 8 will result in different segmentation. IFRS 8 will also                  voting rights that can be exercised or converted on the date of balance. Subsidiaries are consolidated from the
 result in different measurement rules for segment results, segment assets and segment liabilities. Beyond                    time control is transferred to the Group.
 this, the implementation of the amendments listed above is not expected to have any significant effect on
 the consolidated financial statements at the dates of implementation.                                                        The acquisition method is applied for accounting purposes with the purchase of subsidiaries. The acquisition
                                                                                                                              price is measured at fair value of the assets that are rendered as compensation with the purchase, equity
 IASB’s annual improvement project                                                                                            instruments that are issued, obligations incurred with the transfer of control and direct costs tied to the
 Amendments to various standards have or will come into effect in 2009. Below is a list of the most                           acquisition itself. Identifiable acquired assets and liabilities and conditional obligations taken over or incurred
 significant amendments that can have an impact on recognition, measurement and notes:                                        are recognised in the financial statements at fair value on the date of acquisition.
       • IFRS 5 Non-current assets held for sale and discontinued operations: With the planned sale of
            controlling interest in a subsidiary, all assets and liabilities in the subsidiary shall be classified as         Intragroup transactions, accounts and unrealised profit between group companies are eliminated. Unrealised
            held for sale even though the enterprise has the intention of holding a non-controlling share after               loss is eliminated but is regarded as an indicator of the loss in value in relation to the depreciation of the
            the sale.                                                                                                         transferred asset. Accounting principles in subsidiaries are changed where this is deemed necessary to achieve
       • IAS 1 Presentation of financial statements: Assets and liabilities classified as held for sale, in                   conformity with the consolidated accounting principles.
            conformity with IAS 39, are not automatically classified as current in the balance sheet.
       • IAS 16 Property, plant and equipment: Fixed assets that are owned for leasing out purposes and                       The following companies are included in the consolidation:
            which at the end of the lease period are sold as part of ordinary operations shall be transferred to              Name                                                                              Location         Ownership
            stock.                                                                                                                                                                                                               and voting
       • IAS 19 Employee benefits:                                                                                                                                                                                                    share
                 o     Changes in the definition of the terms: Costs with previous periods’ earned pension,
                                                                                                                              Aqua Bio Technology ASA                                                          Sandefjord               100%
                       return on pension funds, current and other non-current payments.
                 o     Changes in pension schemes that reduce the payments related to future earnings are                     Kilda Biolink AS                                                                 Sandefjord               100%
                       treated as deductions.

                                                                                                                        13                                                                                                                          14
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

 2.3 Segment reporting
 A business segment is part of the enterprise that delivers products or services that is subject to risks and returns          The Company has no intangible assets with undefined useful lives. Balance sheet development costs are
 that are different from those of other business areas. A geographical market (segment) is a part of the                       tested for loss in value in accordance with IAS 36. Current development projects are tested for loss in value at
 enterprise that delivers products and services within a limited geographical area that is subject to risks and                each year-end.
 return that are different from other geographical markets.
                                                                                                                               2.7 Inventories
 The Company has identified one business segment; sale of cosmetic products, and three geographical                            Inventories are assessed at the lower of cost and net realisable value. Cost is determined using the first-in,
 segments; Norway, Sweden and others. As a result of the sale of the cosmetics business at the beginning of Q4                 first-out (FIFO) method. The Company has outsourced its production of finished products. The cost of finished
 2008, segment reporting was concluded as of Q3. Financial information relating to segment reporting to and                    goods and work in progress therefore comprises raw materials, direct costs to the producer and other direct
 including Q3 2008 is presented in Note 5.                                                                                     costs. The cost of servicing loans is not included. Net realisable value is the estimated selling price less costs
                                                                                                                               for the production and sale of finished products.
 2.4 Foreign currency translation
 (a) Functional and presentation currency                                                                                      2.8 Trade receivables
 The consolidated financial statements are presented in NOK, which is the parent company’s functional and                      Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
 presentational currency .                                                                                                     effective interest method, 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
 (b) Transactions and balance sheet items                                                                                      according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that
 Foreign currency transactions are translated into the functional currency using the exchange rates prevailing                 the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than
 at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such                     30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is
 transactions and from the translation at year-end exchange rates of monetary assets and liabilities                           the difference between the asset’s carrying amount and the present value of estimated future cash flows,
 denominated in foreign currencies are recognised in the income statement.                                                     discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use
                                                                                                                               of an allowance account, and the amount of the loss is recognised in the income statement within selling and
                                                                                                                               marketing costs. When a trade receivable is uncollectible, it is written off against the allowance account for
 2.5 Tangible fixed assets
                                                                                                                               trade receivables. Subsequent recoveries of amounts previously written off are credited against selling and
 Tangible fixed assets are recognised at acquisition cost less depreciation. Acquisition cost includes expenditure             marketing costs in the income statement.
 that is directly related to the acquisition of the fixed asset. Subsequent costs are included in the asset’s carrying
 amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits              2.9 Government grants
 associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying               Government grants are recognised under other receivables when it can be confirmed with reasonable
 amount relating to the replaced parts is recognised in the income statement. All other repairs and maintenance                certainty that the grant will be received and that appurtenant conditions followed. Grants are entered as
 are charged to the income statement during the financial period in which they are incurred.                                   income over the accounting periods that are necessary to compare them with the related costs for which they
                                                                                                                               are meant to compensate on a systematic basis. In 2008, the Company made use of a special tax-based
 Tangible fixed assets are depreciated using the straight-line method over the assets expected useful life as                  arrangement (skattefunnordning) which was curtailed in the financial year.
 follows:
 – Fixtures and fittings, tools, office machinery and similar assets:        3 - 5 years                                       2.10 Cash and cash equivalents
                                                                                                                               Cash and cash equivalents includes cash in hand, deposits on call at banks, and other short-term, easily
 The residual values and useful lives of the assets are reviewed, and adjusted if necessary, at each balance
                                                                                                                               liquidated investments with a maximum 3 months original maturity. Bank overdrafts, including loans, are shown
 sheet date.
                                                                                                                               in the balance sheet under current liabilities.
 When the balance sheet value of an asset is higher than the estimated recoverable amount, the value is written
 down to the recoverable amount. By recoverable amount is meant the highest value of an asset or fair value of
                                                                                                                               In the consolidate cash flow statement, cash and cash equivalents are as defined above, but corrected for
 a cash-generating entity less sales costs and its used value. If one of these amounts exceeds the asset’s
                                                                                                                               called on overdrafts.
 balance sheet value, the asset has not fallen in value, and it is not necessary to estimate the other amount.

 Gains and losses on disposals are recognised in the income statement net, and constitute the difference                       2.11 Trade payables
 between sale price and balance sheet value.
                                                                                                                               Trade payables are recognised initially in the balance sheet at fair value and subsequently measured at
                                                                                                                               amortised cost using the effective interest method.
 2.6 Intangible assets
                                                                                                                               2.12 Loan facilities
 Research and development
                                                                                                                               Loans are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, loans are
 Research expenditure is recognised as an expense as incurred. Costs incurred on development projects                          recognised at amortised cost calculated using the effective interest method. The difference between the
 (relating to the design and testing of new or improved products) are recognised as intangible assets only                     amount borrowed (less transaction costs) and the redemption value is recognised in the income statement over
 when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will                 the period of the loan.
 be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will
 generate future economic benefits, the availability of resources to complete the asset and the ability to                     2.13 Payable and deferred tax
 measure reliably the expenditure during the development. Other development costs are recognised as an                         The tax cost consists of tax payable and the change in deferred tax.
 expense as incurred. Development costs previously recognised as an expense are not recognised in the
 balance sheet in subsequent periods. Development costs that have a limited useful life and that have been                     Tax payable
 capitalised are amortised from the commencement of the commercial production of the product on a straight-                    Tax payable consists of the taxable result for the year. Taxable result is different from the accounting result
 line basis over the period of its expected useful life (maximum 3 years). Patents and similar rights are                      because certain revenues and expenditures are accounted tax-wise to other periods in relation to the normal
 depreciated from the date they are allotted according to the straight-line method over the patents’ or similar                accounting period. In addition, certain revenues and expenditures are not part of the tax base. The
 rights’ expected useful life.                                                                                                 Company’s tax payable is based on tax rates that are agreed or are primarily agreed on the date of balance.
                                                                                                                         15                                                                                                                             16
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

 Deferred tax/tax advantage                                                                                                    3. Financial Risk Management
 Deferred tax advantage is recognised when it is deemed probable that the Company will have adequate                           The Company’s activities involve to a certain extent various types of financial risk. The Group’s primary risk
 taxable earnings in subsequent periods to be able to utilise the tax advantage. The companies recognise                       management plan is focused on the unpredictability of the capital markets, and is aimed at minimising the
 previously unrecognised deferred tax advantages to the extent it has become probable that the company can                     potential negative effects on the Group’s financial results. The Company does not make use of any financial
 utilise the deferred tax advantage. Similarly, the company will reduce its deferred tax advantage to the extent               derivatives to safeguard itself against financial risk. The Company seeks to obtain funding in the capital
 the company no longer regards it as probable that it will be able to utilise the deferred tax advantage.                      market or from other private capital if necessary.

 Deferred tax and deferred tax advantage are measured based on expected future tax rates to the companies
                                                                                                                               Currency Risk
 in the Group where temporary differences have arisen.
                                                                                                                               A substantial portion of the company’s transactions during the accounting period has been conducted in NOK
 Deferred tax and deferred tax advantage are accounted at nominal value and are classified as financial                        and/or SEK. Due to limited scope, the Group has not entered into any contracts to secure transactions in a
 assets (non-current liabilities) in the balance sheet. The tax rate used is the tax rate that applies at the date             foreign currency.
 for reversing of temporary differences.
                                                                                                                               Interest Risk
 Tax payable and deferred tax is recognised direct against equity to the extent the tax items are related to
                                                                                                                               The company has no interest bearing debt on the balance sheet date, and has consequently no interest risk, ref
 equity capital transactions.
                                                                                                                               note 13.

 2.14 Employee benefits and share-based remuneration                                                                           Credit Risk
 Retirement benefit obligations                                                                                                The company has a limited number of customers and thus a certain concentration of credit risk. The age
 The Company refers to current statutory provisions concerning pension saving for its employees. This means                    composition of receivables is monitored continually and historically credit losses have been low. Substantial
 that 2% of the employees’ earnings is paid as a contribution to a separate legal entity that administers the                  loss provisions have been made in 2008 related to 2 major clients within sales of cosmetics. A total loss on
 employees’ pension schemes. The Company has no legal or other obligation to undertake further payments                        receivables of MNOK 0.71 has been entered in 2008, of which MNOK 0.95 relates to unrealized losses and
 after the contribution is paid. Pension contributions are recognised as payroll costs when they fall due.                     MNOK 0.215 relates to a correction of a former liability. Accounts receivable as of 31 Dec 2008 constitutes
                                                                                                                               MNOK 0.3 in total and the credit risk is low.
 Share-based remunerations
 The fair value of allotted share options is factored in as a payroll cost with a corresponding increase of the equity         Liquidity Risk
 capital. Fair value is measured at the time the share options are allotted and is distributed over the periods until          As cosmetics sales failed in 2008, the company’s liquidity has gradually deteriorated. A debt settlement was
 the share option owner has earned an unconditional right to use the options. The fair value of allotted share                 entered into in April 2009, and an increase in capital was carried out, providing the Group with sufficient
 options is measured using the Black & Scholes model (B&S), which takes account of the duration and conditions                 working capital for a period of 15 months. Conf note 13 (Liabilities) and 21 (Events Subsequent to the
 for the allotment of the options. The amount factored in as a cost is adjusted to reflect the actual number of share          Balance Sheet Date) for further details. The management revises the cash flow continuously and will
 options earned, apart from instances where lapse is only attributable to the share price not reaching the limit for           implement corrective measures as required.
 recovery.


 2.15 Lease agreements                                                                                                         4. Critical Accounting Estimates and Assessments
 Lease agreements where a significant part of the risk and return related to ownership is retained by the lessor               Estimates and assessments are continually evaluated and are based on historical experience and other
 are classified as operational lease agreements. Lease payments relating to operational agreements are                         factors, including expectations of future events that are considered likely under the current circumstances.
 recognised on a straight-line basis over the period of the lease.                                                             Nothing has happened in the year to suggest that the basis on which estimates and assessments are made
                                                                                                                               should be changed, and thus no changes have been noted in effects related to these.
 2.16 Revenue accounting
                                                                                                                               The Group prepares estimates and makes assumptions related to the future. The accounting estimates
 During the accounting year the Company has produced and sold cosmetic products to wholesalers (up to and
                                                                                                                               resulting from this will by definition seldom be in complete accordance with the final result. Estimates and
 including Q3). During the accounting year the Company has produced and sold cosmetic products to
                                                                                                                               assumptions that represent a significant risk for major changes in the balance sheet value of assets and
 wholesalers (up to and including Q3). Proceeds from the sale of goods are recognised in the income
                                                                                                                               liabilities during the next accounting year are discussed below.
 statement when the Company has delivered the goods to the wholesaler. The wholesaler may choose
 whatever sales channel he prefers, and is also free to set the price of the product, and there are no unfulfilled
                                                                                                                               Depreciation and Devaluation of Intangible Assets
 obligations that can affect the wholesaler’s acceptance of the product. Delivery is not complete until the
                                                                                                                               Intangible assets constitute a substantial portion of the Company’s balance. Estimated expected useful life
 products are dispatched to an agreed location and when the risk of loss and obsolescence is transferred to the
                                                                                                                               and related depreciation rates are critical factors for the Company. Estimated expected life is subject to
 wholesaler. In addition, the wholesaler must have accepted the delivery as part of the contract, the deadline for
                                                                                                                               reassessment at the end of each financial year. Changes in estimates could have a significant effect on the
 submitting complaints must have expired or there must be proof that all criteria related to the delivery are
                                                                                                                               Company’s results.
 satisfied. Sales revenue consists of the product’s fair value minus VAT and any discounts.

                                                                                                                               The Company’s intangible assets are assessed yearly for possible devaluation. The tests to determine any
                                                                                                                               decrease in value are based on estimates related to cash-generating units. The estimates are based on
                                                                                                                               assumptions regarding future cash flow which is discounted according to the chosen discount rate. Finding
                                                                                                                               the appropriate required rate of return and basing the calculation on the appropriate real economy
                                                                                                                               assumptions have represented a major challenge in 2008. Conf note 7.

                                                                                                                               Deferred Tax/Deferred Tax Advantage
                                                                                                                               The Company has a considerable conveyable tax-related deficit. Following the acquisition of Kilda Biolink AS
                                                                                                                               in May 2007 and the assets identified in connection with the purchase price allocation, the deferred tax
                                                                                                                               advantage identified is balanced against tax.

                                                                                                                         17                                                                                                                     18
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                              ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


 5. Segment information                                                                                                                 7. Intangible Assets
 The Segment Results for 2008 are as Follows:                                                                                                                                                                                   Patents and      Development
                                                           Norway              Sweden            Other             Total                                                                                                         Licences           Costs             Total
Operating Revenue                                               696 996           3 901 179        185 200          4 783 375           Per 1 January 2007
                                                                                                                                        Cost                                                                                         539 869          6 829 568     7 369 437
Cost of Sales                                                 (114 448)          (4 488 874)       (92 600)        (4 695 922)
                                                                                                                                        Accumulated Depreciation and Devaluation                                                     (49 636)         (723 163)      (772 799)
Gross Earnings                                                  582 248            (587 695)        92 600             87 453
                                                                                                                                        Value Recognized in the Balance Sheet per 1 January 2007                                     490 233          6 106 405     6 596 638
Operating Costs                                                                                                  (22 765 957)
Depreciation                                                                                                      (8 370 685)
                                                                                                                                        Accounting Year 2007
Devaluation                                                                                                      (18 000 000)
Operating Result                                                                                                 (49 049 193)           Value Recognized in the Balance Sheet per 1 January 2007                                     490 233          6 106 405     6 596 638
                                                                                                                                        Additions Related to Acquisitions                                                                    -       65 795 070    65 795 070
Net Financial Income/(Costs)                                                                                        (190 805)
                                                                                                                                        Additions                                                                                            -        2 110 601     2 110 601
Pre-Tax Result                                                                                                    (49 239 998
                                                                                                                                        Depreciation                                                                                 (35 744)       (5 552 618)    (5 588 362)
Tax                                                                                                              (13 151 317)
                                                                                                                                        Value Recognized in the Balance Sheet per 1 January 2007                                     454 489         68 459 458    68 913 947
Financial Result                                                                                                 (36 088 681)

                                                                                                                                        Per 31 December 2007
The reason for the negative gross earnings in Sweden is the sale of copyrights to the Swedish company Zona Nordic AB in Q4
                                                                                                                                        Cost                                                                                         539 869         74 735 239    75 275 108
which are described above and in note 19.
                                                                                                                                        Accumulated Depreciation and Devaluation                                                     (85 380)       (6 275 781)    (6 361 362)
                                                                                                                                        Value Recognized in the Balance Sheet per 1 January 2007                                     454 489         68 459 458    68 913 946
The Segment Results for 2007 are as Follows:
                                                           Norway              Sweden            Other            Total
Operating Revenue                                             2 821 742           2 427 639      1 788 608          7 037 989
Cost of Sales                                               (3 419 777)          (2 027 075)   (1 462 510)         (6 909 362)                                                                                                  Patents and      Development
Gross Earnings                                                (598 035)             400 564        326 098            128 627                                                                                                    Licences           Costs             Total
Operating Costs                                                                                                  (14 799 390)           Per 1 January 2008
Depreciation                                                                                                       (5 816 264)          Cost                                                                                         539 869         74 735 239    75 275 108
Operating Result                                                                                                 (20 487 027)           Accumulated Depreciation and Devaluation                                                     (85 380)       (6 275 781)    (6 361 162)
Net Financial Income/(Costs)                                                                                        (308 458)           Value Recognized in the Balance Sheet per 1 January 2008                                     454 489         68 459 458    68 913 946
Pre-Tax Result                                                                                                   (20 795 485)
Tax                                                                                                               (8 821 121)           Accounting Year 2008

Financial Result                                                                                                 (11 974 365)           Cost                                                                                         539 869         74 735 239    75 275 108
                                                                                                                                        Additions                                                                                            -          710 618       710 618
                                                                                                                                        Disposals                                                                                   (275 620)       (4 873 619)    (5 149 239)
6. Tangible Fixed Assets
                                                                                                                                                                                                                                                                    (18 000 00
Accounting Year                                                                                      2008                  2007         Devaluation                                                                                          -     (18 000 000)             0)
Opening Balance per 1 January                                                                     425 052            118 025                                                                                                                                        (26 015 13
Additions                                                                                         313 832            534 929            Depreciation                                                                                 (19 660)       (7 995 479)             9)
                                                                                                                                        Value Recognized in the Balance Sheet per 31 December 2008                                   159 214         38 300 973    38 460 187
Depreciation                                                                                     (285 154)          (227 902)
Devaluation                                                                                       (70 392)                    -
                                                                                                                                        Per 31 December 2008
Value Recognized in the Balance Sheet per 31 December                                             383 338            425 052            Cost                                                                                         264 249         70 600 529    70 864 778
                                                                                                                                                                                                                                                                    (32 376 30
Accumulated                                                                                                                             Accumulated Depreciation and Devaluation                                                    (105 035)      (32 271 260)             0)

Acquisition Costs                                                                               1 006 486            692 654
                                                                                                                                        Estimated life                                                                            20 years        5-10 years
Accumulated Depreciation                                                                         (552 756)          (267 602)
                                                                                                                                        Depreciation Method                                                                        Linear            Linear
Accumulated Devaluation                                                                           (70 392)                    -
Value Recognized in the Balance Sheet per 31 December                                             383 338            425 052           Intangible Assets
                                                                                                                                       In connection with the sale of Zona and Kilda including related rights, the Company has disposed of rights and licenses entered at
                                                                                                                                       MNOK 0.275 as well as development costs recognized in the balance sheet related to Zona and Kilda equalling MNOK 4.873. During
Economic Life                                                                                   3 - 5 years        3 - 5 years
                                                                                                                                       2008 an additional MNOK 0.710 was recognized in the balance sheet as development costs.
Depreciation Method                                                                                 Linear             Linear          Refer to note19 for further information concerning the sale of Zona and Kilda including related rights.

                                                                                                                                       Patents and Licences
                                                                                                                                       Patents relate to costs in connection with the acquisition of new patents. Patents are depreciated over the estimated expected life of
                                                                                                                                       the respective patent. Following the sale of Zelda and Kilda, the entered patent values are exclusively related to Zonase and SMIDS.

                                                                                                                                  19                                                                                                                                            20
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                       ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

                                                                                                                                               8. Accounts Receivable and other Receivables (Cont.)
Development Costs
                                                                                                                                               Per 31 December, age distribution of outstanding receivables appears as follows:
Development costs are all costs related to the development of products for sale. This is an ongoing process that runs from the end of
the research phase until the product is introduced to the market and includes subsequent product improvements. The development
costs are depreciated from and including the month in which the respective products are introduced to the market and over a period of
                                                                                                                                                                                                                                                         2008              2007
5 to 10 years depending on the product.
                                                                                                                                               Total                                                                                                      1 234 170       2 122 292

As mentioned above, development costs primarily include costs related to the purchase of services from research institutes and                 Neither Overdue nor Devalued                                                                                        -      1 398 528
laboratories for better documentation of the positive effects of the Zonase enzyme, and to exclude the possibility of any negative             < 30 days                                                                                                           -           1 571
effects. This documentation is required in order to be able to introduce the products and Zonase to the international market. The major
                                                                                                                                               31 – 60 days                                                                                                        -        257 223
cosmetic companies which represent the Company’s future customers will require such documentation before they are willing to enter
into discussions concerning the use of Zonase in their own products.                                                                           61 – 90 days                                                                                                        -                   -
                                                                                                                                               > 90 days                                                                                                  1 234 170         464 970
Depreciation of Development Costs
At the time of acquisition in 2007 expectations were that the Company would be in the marked directed towards the major international          9. Inventories
cosmetic companies during 2008. Tests and quality controls at these companies have taken longer than assumed. The Company
believes that contract may realistically be concluded during 2009.                                                                                                                                                                                         2008            2007
                                                                                                                                               Raw Materials                                                                                            31 452 333       31 899 951
Uncertainties related to the cash flow in the Company are nevertheless so substantial that the Company has decided to depreciate
                                                                                                                                               Work in Progress                                                                                              10 994         863 077
intangible assets by MNOK 18.
                                                                                                                                               Finished Goods                                                                                             1 777 083       4 365 883
The Company has depreciated the value of intangible assets to an amount that can be recovered. The recoverable amount is                                                                                                                                33 240 361       37 128 911
calculated according to present value based on expected, future earnings. The analysis utilizes a required rate of return of 15.8%.            In connection with the sale of Zona and Kilda, finished goods related to these two series of products were sold. All inventory in the
The value estimate is burdened with uncertainties that to some extent are major. This is especially the case for expected earnings.            Company balance as of 31 December 2008 is related to Zonase in a more or less processed form. Refer to note 19 for further
Recoverable amount is based on an average “enterprise value with deductions made for liabilities and a constant growth model (1%):”            details concerning this sale.
The analysis is based on a conservative estimate, described in the Company as “low case.” In order to carry out “low case,” the
Company may need further increase in capital in 2010.
                                                                                                                                               10. Cash and Cash Equivalents
8. Accounts Receivable and other Receivables                                                                                                                                                                                                               2008            2007

                                                                                                          2008                2007             Cash at Bank and on Hand                                                                                      79 416       1 109 584
Accounts Receivable                                                                                         1 234 170        2 122 292         Term Bank Deposits                                                                                            67 773         257 303
Provision for Future Losses on Accounts Receivable                                                          (950 000)          (31 160)
                                                                                                                                                                                                                                                            147 190       1 366 887
Accounts Receivable - Net                                                                                     284 170        2 091 132
Pre-Payments                                                                                                2 630 698          110 667
Other Current Receivables                                                                                     260 190        2 400 131         Cash and cash equivalents include the following for the purposes of the cash flow statement:
Receivables from Related Parties                                                                               47 430           38 247                                                                                                                     2008            2007
Per 31 December                                                                                             3 222 488        4 640 177         Cash and Cash Equivalents                                                                                    147 190       1 366 887
                                                                                                                                               Bank Overdrafts                                                                                                     -               -
The value recognized in the balance sheet is considered to represent the real value of accounts receivable and other receivables
that are liquid or fall due within a short period of time (less than three months).                                                                                                                                                                         147 190       1 366 887

Accounts Receivable
Accounts receivable comprise non-interest bearing receivables which are primarily granted with 30-days credit. Customers are                   Term bank deposits comprise tax deductions for employees deposited in a dedicated account.
invoiced after an order is received and made ready for dispatch. Provisions for future losses are based on an assessment of each
individual receivable.

Pre-Payments
Pre-payments comprise payments such as deposits and licences. Out of the pre-payments entered, MNOK 2.481 is related to the
purchase of Zonase from Aquazyme Technology AS, (formerly Zonase AS).

Other Current Receivables
Other current receivables include VAT deductions and other accumulated expenses.

Receivables from Related Parties
Receivables from related parties comprise among other things payment transfers to employees for use on business trips.




                                                                                                                                          21                                                                                                                                               22
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

11. Share capital                                                                                                                         Overview of the largest shareholders in the Company as of 31 December 2008:
                                                                                                                                          Name of shareholder                                                                                         No. of      % share
                                                                             No. of        Ordinary      Nominal        Total share
                                                                                                                                                                                                                                                     shares
                                                                             shares         shares        value           capital
                                                                                                                                          Zym Holding AS *                                                                                        4 456 250       23.16 %
As of 31 December 2006                                                       1 500 000      1 500 000           0,10         150 000
                                                                                                                                          Bolaks AS                                                                                               3 624 750       18.84 %
–    Proceeds from share issue                                                 50 000          50 000           0,10            5 000
                                                                                                                                          Adeler Capital AS (kontrolleres av Einar O. Vangsnes, tidligere adm.dir.)                               1 747 757        9.08 %
–    Write up of share capital (capitalisation issue)                                 -     1 550 000           1,00       1 550 000
                                                                                                                                          Bluefield AS (kontrolleres av Kjetil Dahl, styremedlem)                                                 1 121 725        5.83 %
–    Share issue related to acquisition                                      1 550 000      1 550 000           1,00       3 100 000
                                                                                                                                          Pecunia Forvaltning                                                                                     1 000 000        5.20 %
–    Proceeds from share issue
                                                                              147 070        147 070            1,00       3 247 070      Molvær Ivar Arvid                                                                                         801 665        4.17 %
–    Conversion of debt to equity capital                                                                       1,00       3 287 070
                                                                               40 000          40 000                                     Katalysator AS                                                                                            480 362        2.50 %
–    Share split
                                                                            16 435 350    16 435 350            0,20       3 287 070      Svenska Handelsbanken, Nominee                                                                            474 000        2.46 %
–    Proceeds from share issue                                                                                                            Aquazyme Technology AS
                                                                             1 569 388      1 569 388           0,20       3 600 948                                                                                                                387 888        2.02 %
As of 31 December 2007                                                      18 004 738    18 004 738            0,20       3 600 948      MP Pensjon                                                                                                330 000        1.71 %
–    Proceeds from share issue                                                                                                            Kjelstadli Jarl                                                                                           289 331        1.50 %
                                                                             1 238 000      1 238 000           0,20       3 848 548
As of 31 December 2008                                                                                                                    Barske Gleder AS                                                                                          250 000        1.30 %
                                                                            19 242 738    19 242 738            0,20       3 848 548
                                                                                                                                          Tenvik Diagnostikk og Forvaltning AS                                                                      250 000        1.30 %
The total number of affirmative ordinary shares as of 31 December 2008 is 19 242 738 (2007: 18 004 738 shares) each of face value         Tannlege Per Hagen AS                                                                                     248 855        1.29 %
NOK 0.20 per share. All issued shares are fully paid up. The Company has a single share class and all shares represent one vote.          Gullas AS                                                                                                 247 000        1.28 %
                                                                                                                                          CAR ASA (konkursbo)                                                                                       223 000        1.16 %
Voting rights for transferred shares can be invoked when the transfer is registered in Verdipapirsentralen (VPS) – the Norwegian
Central Securities Depository – within the deadline for notification to the General Meeting. Pursuant to Norwegian legislation votes      Ukranor AS                                                                                                219 000        1.14 %
can only be cast for shares that are registered in the owner’s name. If the shareholder is prevented by circumstance from casting         Krogsrud Invest AS                                                                                        175 000        0.91 %
his/her vote, at the General Meeting, the shareholder can appoint a representative (award power of attorney) to vote on his/her           Nordea Bank Norge AS                                                                                      169 800        0.88 %
behalf.
                                                                                                                                          Oslo og Follo Kjeveortopedi AS                                                                            166 200        0.86 %
In connection with the implementation of a public share issue prior to stock exchange listing in January 2008, 1 238 000 new shares       Total                                                                                                  16 662 583       86.59 %
were registered in the Brønnøysund registers. The share issue was implemented in December 2007, with payment and registration             Others                                                                                                  2 580 155       13.41 %
in Brønnøysund in January 2008.                                                                                                           Total number of shares                                                                                 19 242 738       100.0 %

We refer to note 21 (Events after the balance date) for further information about the Company’s share capital and powers of attorney
                                                                                                                                         * 11 November 2008 a demerger of shares of the shares in Zym Holding AS was implemented. The new companies were notified to
awarded to the Board of Directors to increase share capital.
                                                                                                                                         the Brønnøysund Registers simultaneously. The demerger was not registered in the VPS by the close of 2008.

Share options
                                                                                                                                         Zym Holding AS was split as follows:
In accordance with a previous agreement with the Company dated 8 May 2007, Kjell H. Bakke (previously Chairman of the Board)
holds an option to purchase 310 000 shares at a cost of NOK 7.20 per share. The option can be invoked from 8 May 2007 to and
                                                                                                                                          Zym Holding AS by Bernt Th. Walther (member of the Board)                                                                  57.08 %
including 14 May 2012. Bakke vacated his position of Chairman of the Board in August 2008 and thus lost his right to 2/3 of the
options. The remaining 1/3 of the options are retained.                                                                                   A-Zym AS by Arild Roar Rasmussen (Managing Director from 1 February 2008)                                                  20.87 %
                                                                                                                                          T-Zym AS, by Tom Stemre                                                                                                   16.52 %
Two key employees, Ståle Bergum (CFO) and Dag Oppen-Berntsen (R&D Director) were awarded options in January 2008 of                       Prozym AS, by Chun Jun Rong                                                                                                5.53 %
purchasing 150 000 shares each at the price NOK 9.90 per share. Half of the options can be invoked from 1 January 2010 and the
remainder from 1 January 2011. The options expire on 31 December 2011.
                                                                                                                                         Shares owned by members of the Board iof Directors and key personnel as of 31 December 2008:

The options were priced using the Black & Scholes model adjusted for the probability of early implementation in accordance with
                                                                                                                                          Name                                                                Position/post                                    No. of shares
clauses in the agreements. The estimated volatility of 50 % is based on a comparison to other companies. It is not expected that
dividends will be paid during the said period, and the risk-free interest is stipulated to be between 4.64 – 4..2 %. As of 31 December    Kjeld P. Rimberg (via Kjeld Rimberg & Co AS)                        Retiring Chairman                                      15 000
2008 NOK 0.3 millions has been allocated in connection with the option agreements in that the share price has been reduced during         Bernt Th. Walther (via Zym Holding AS)                              Board member                                        2 543 628
the course of the year.
                                                                                                                                          Kjetil Dahl (via Bluefield AS)                                      Board member                                        1 121 725
                                                                                                                                          Arild R. Rasmussen *                                                Managing Director                                     978 019
Development of share options in 2008:
    Outstanding      Allotted       Exercise    Expired       Outstanding   Redeemabl       Agreed      Real worth        Final           Einar O. Vangsnes (via Adeler Capital AS)                           Managing Director (to and including 31.01.08)       1 747 757
    at 01.01.08       in the        d in the     in the       at 31.12.08      e on       share price   at 31.12.08     invoking          Dag Oscar Oppen-Berntsen (via Cardinal Science AS)                  Director of Research                                  159 000
                     period          period     period                       31.12.08                                     date
        310 000                 -           -   206 667          103 333              -    NOK 7,20      NOK 2,26      14.05.2012        * Of which 930 019 shares via Zym Holding AS
                -    150 000                -             -      150 000              -    NOK 9,90      NOK 3,15      01.01.2012
                -    150 000                -             -      150 000              -    NOK 9,90      NOK 3,70      01.01.2012
There were no other share option schemes as of 31 December 2008.

                                                                                                                                    23                                                                                                                                  24
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

                                                                                                                                          Fixed assets                                                                                                   (15 258)             13 338
12. Trade payables and other current liabilities                                                                                          Current assets                                                                                          29 163 638            28 646 656

                                                                                                          2008               2007         Conveyable deficit                                                                                     (52 940 367)          (29 802 832)
                                                                                                                                          Total temporary differences at 31 December                                                              13 652 464            60 621 475
Trade payables                                                                                            2 499 762         4 625 923

Owed to related parties (Note 20)                                                                              78 710       1 357 052
                                                                                                                                          Deferred tax/tax advantage                                                                                 2008                 2007
Social security, VAT and other taxation payable                                                               188 506        543 704      Intangible assets                                                                                      (10 484 446)            (756 203)
Accrued expenses                                                                                          1 392 596           836 626     Fixed assets                                                                                                         4 272          (8 209)
                                                                                                          4 159 574         7 363 304     Current assets                                                                                          (8 165 819)           (8 021 064)
                                                                                                                                          Conveyable deficit                                                                                      14 823 303             2 872 732
Accrued expenses encompass accrued, unpaid holiday pay, allocated Directors’ fees and various other accrued costs, incl. Interest
due on loans from close associates.                                                                                                       Total deferred tax/tax advantage at 31 December                                                         (3 822 690)          (16 974 013)


13. Loans                                                                                                                                 Change in deferred tax                                                                                  13 151 317             8 821 121

                                                                                                          2008              2007
                                                                                                                                          Calculation of effective tax rate                                                                          2008                 2007
Long-term loans
Long-term allocations (note 19)                                                                        3 080 000                     -    Profit/(loss) before tax                                                                               (49 239 998)          (20 795 485)
Other long-term liabilities                                                                            3 000 000            1 262 506     Tax based on applied tax rate (28%)                                                                    (13 787 199)           (5 822 735)
                                                                                                       6 080 000            1 262 506     Effect of permanent differences                                                                                 789 782        (674 579)
                                                                                                                                          Effect of temporary differences                                                                         13 151 323             6 497 314
                                                                                                                                          Effect of government grants                                                                                (153 906)                      -
Overdraft facility                                                                                                -                  -
                                                                                                                                          Taxes                                                                                                                    -                -
Debentures and other short-term loans                                                                             -                  -
                                                                                                                                          Effective tax rate                                                                                                   0,0 %           0,0 %
Shares issued but not registered in the Brønnøysund Register of Enterprises by year-end                           -                  -
                                                                                                                                         At year-end, the Group had a conveyable deficit that could be used against future taxable income. This relates to a deferred tax
                                                                                                                  -                  -   advantage that with predominant probability will reduce future tax liabilities.
Sum loans                                                                                              6 080 000            1 262 506
Long-term loans and other commitments are linked in the entirety to the sale of Zona and Kilda with the accompanying rights (note        15. Payroll costs
19). The loan of NOK 3 000 000 is interest-free for three years, taken up at real worth and terms and conditions for payment shall                                                                                                            2008                     2007
be clarified by 15 January 2012. The worth of the loans entered in the balance sheet are deemed to be the real worth.                    Wages and salaries                                                                                  3 838 577                   4 194 353
                                                                                                                                         Employer’s contribution                                                                               494 282                    770 248
The table below shows the repayment profiles for the Group’s debts as of 31 December 2008 based on non-discounted
repayments:                                                                                                                              Pension costs                                                                                         138 554                        90 571
     Amount             Due within 12 months          Due between 1 and 5 years       Due after 5 years                                  Other                                                                                                  42 027                    128 145
       3 080 000                         385 000                        1 925 000                 770 000                                                                                                                                    4 513 439                   5 183 316
       3 000 000                                  -                     3 000 000                         -                              No. of employees                                                                                                10                       10
                                                                                                                                         No. of man-labour years                                                                                         8,5                     7,8
14. Tax payable and deferred tax
 Taxes                                                                                                    2008               2007
                                                                                                                                         Auditor’s remuneration                                                                                2008                             2007
 Tax payable                                                                                                          -              -
 Change in deferred tax                                                                                (13 151 317)        (8 821 121)   Auditor’s fees                                                                                     120 000                       141 996

 Taxes                                                                                                 (13 151 317)        (8 821 121)   Tax advice                                                                                                  -                    100 000
                                                                                                                                         Authorisation fees                                                                                  27 000                           15 000
                                                                                                          2008               2007
                                                                                                                                         Other non-audit related services                                                                   269 689                       745 205
 Basis for calculating tax
                                                                                                                                         Total                                                                                              416 689                      1 002 201
 Profit/(loss) before tax                                                                              (49 239 998)       (20 795 485)
 Government grants                                                                                        (549 664)                  -   All amounts are ex VAT. Other services supplied by the Auditor encompass amongst other things assistance with IFRS in part-year
                                                                                                                                         reports and the annual accounts.
 Permanent differences                                                                                    2 820 651        (2 409 211)
 Change in temporary differences as a result of acquisition                                                           -    91 764 019
 Change in temporary differences                                                                        46 969 011        (68 559 321)   15. Payroll costs (cont.)
 Basis for calculating tax                                                                                            -              -   Other remunerations                                                                                   2008                             2007
                                                                                                                                         Remunerations to key personnel (see separate matrix)                                             1 507 072                      1 483 055
 14. Tax payable and deferred tax (cont.)
                                                                                                                                         Remunerations to members of the Board (1)                                                        1 021 282                       450 000
                                                                                                                                         Total                                                                                            2 528 354                      1 933 055
 Temporary differences                                                                                    2008               2007
 Intangible assets                                                                                      37 444 451         61 764 019
                                                                                                                                    25                                                                                                                                            26
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                       ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


 Remunerations to key personnel                                                                    2008
                                                                                                                                                Currency differences (taken to expenses/income) in the financial statements are as follows:
                                                                     Salary             Pension            Other                Sum
                                                                                                                                                                                                                                                                   2008              2007
 Einar O. Vangsnes*                                                      66 667                 1 333         333                      68 334
 Arild R. Rasmussen**                                                  785 955                        -            -                  785 955   Currency gains                                                                                                        44 145           53 875

 Ståle Bergum                                                          640 310                 12 806       4 000                     657 116   Currency loss                                                                                                      (181 799)          (11 439)
 Sum 2008                                                            1 492 932                 14 140       4 333                 1 511 405
                                                                                                                                                Net currency gains/(loss)                                                                                          (137 654)           42 436
 Sum 2007                                                            1 519 975                 30 400       7 694                 1 558 069


* Einar Otto Vangsnes was Managing Director until 31 January 2008                                                                               17. Earnings per share
** Arild R. Rasmussen took over as Managing Director from 1 February 2008. He is hired in from Bolaks AS. Reported
remunerations are based on invoices received from Bolaks AS in 2008. His remuneration from Bolaks AS in 2008 was NOK 577 130.                   (a) Earnings per share
                                                                                                                                                Earnings per share are calculated by dividing the part of the annual result that is ascribed to the company's shareholders with a
                                                                                                                                                weighted average number of issued ordinary shares through the year less own shares.
 Remunerations to members of the Board of Directors                                                       2008
                                                                                       Salary and                                                                                                                                                                   2008             2007
                                                                                         other            Director’s fees                       Result for the year ascribed to the company's shareholders                                                     (36 088 681)      (11 974 365)
                                                                                     remunerations               *                Sum
                                                                                                                                                Weighted average number of shares issued *                                                                       19 219 060       12 971 767
 Kjell H. Bakke (retired from the Chair in August 2008)                                      212 282                        -         212 282
                                                                                                                                                Earnings per share (NOK per share)                                                                                     (1,88)           (0,92)
 Kjeld P. Rimberg (new Chairman from August 2008)                                            195 000                        *               *
 Kjetil Dahl                                                                                   70 000                       *               *   * The number of shares is adjusted to be comparable with the number of shares after the demerger implemented in September
 Bernt Th. Walther                                                                                   -                      *               *   2007 with a face value of NOK 0.20.
 Anne-Sofie Utne                                                                               22 000                       *               *
 Tone Bjørnov (new member of the Board from February 2008)                                     16 000                       *               *   (b) Diluted earnings per share
                                                                                                                                                The calculation of diluted earnings per share uses the weighted average number of issued ordinary shares in circulation adjusted
 Sum 2008                                                                                    515 282               506 000        1 021 282
                                                                                                                                                for the effect of conversion of all potential shares that could result in dilution. Share options are the only shares that can potentially
 Sum 2007                                                                                    375 000                   75 000         450 000
                                                                                                                                                result in dilution. If a negative result is achieved invoking potential shares will have a diluting effect. After IFRS one shall ignore the
* Distribution of fees to the Board of Directors for 2008 has not been finalised. The Election Committee will do this at the earliest
                                                                                                                                                effect of potential shares that result in dilution so that the calculation shows the same result per share as prior to the effect.
opportunity.

The Board of Director’s statement relating to the fixing of salaries and other remunerations to key personnel.                                  18. Obligations and commitments
The Company is currently in a situation where running costs are higher than revenues. It is therefore important for the Company to
maintain total costs, including the salaries of key personnel, at a level that can be justified based on the Company's financial position.      In connection that from the turn of the year (note 21) the Group has implemented debt settlement negotiations with resulting
                                                                                                                                                agreement, operational lease agreements have been brought to a close. The Company’s agreements on the lease/rental of facilities
Pursuant to the power of attorney awarded by the General Meeting on 16 April 2009, the Board can stipulate terms and conditions for             and equipment have also been terminated a part of the debt settlement agreement. The Company’s obligations/commitments are
future option programmes that encompass key employees and members of the Board up to 10 % of share capital stipulated by the                    linked to Zona Nordic AB (note 13, note 19) and the company has long-term rights to the SMIDS technology, with annual costs at NOK 200 000.
same General Meeting. For mire details please refer to note 21 (Events since the balance date).
                                                                                                                                                Apart from that which is entered in the presented accounts as of 31 December 2008, the Company has committed itself in connection with the debt
The Group has a mandatory obligation to have a pension scheme pursuant to the Act on mandatory pensions. The Group’s pension                    settlement agreement (note 21) to settle creditors’ claims totalling NOK 0.996 million by 1 April 2011.
scheme meets with the requirements laid down in this act.
                                                                                                                                                Future collated minimum payments in connection with the above-mentioned lease/rental agreements are as follows:
Report for 2008.                                                                                                                                                                                                                                     2008                            2007
Remunerations to the Company’s Managing Director and other key personnel in 2008 were based on the same principles as                           Due date within 1 year                                                                                              747 500           760 196
described above. Share options for key personnel (note 11) awarded in January 2008 were based on power of attorney awarded to                   Due date between 1 and 5 years                                                                                              -          48 750
the Board within a framework of 825 000 shares at the nominal worth of NOK 165 000. Apart from the said allocations, the power of
                                                                                                                                                Due date later than 5 years                                                                                                 -                 -
attorney has not been used in 2008. After the turn of the year the power of attorney was replaced by a new power of attorney (see
note 21). Please also refer to note 11 for information concerning options to key personnel in the Company.                                                                                                                                                          747 500           808 946


As of 31 December 2008 there were no agreements on severance arrangements for the Managing Director or members of the Board.
No agreements on bonuses or options for the Managing Director or Chairman of the Board have been entered into since the balance
day date. An agreement was entered into for the Chairman of the Board after the close of the year. Please refer to note 21 for details.

Remunerations to members of the Board encompass remunerations to 4 members of the Board for tasks completed in addition to the                  19. The sale of Zona and Kilda with accompanying rights
work of the Board (NOK 303 000) and allocations for ordinary director’s fees in 2008 (NOK 506 000). In that the company has been                An agreement was entered into with Zona Nordic AB on the sale of Zona and Kilda (the Group’s own brand cosmetic creams) and
in an integration phase after the purchase of Kilda Biolink AS in 2007, Kjell H. Bakke (previous Chairman), had through his company             accompanying rights on 7 October 2008. As part of the sale agreement for the brands, Zona Nordic AB has signed an agreement
Bakke Consulting AS, a monthly fee of NOK 50 000 as compensation for work in and on behalf of the Company. This arrangement                     with ABT to purchase Zonase (as an ingredient in the creams).
was discontinued in May 2008, and K.H.Bakke has renounced the ordinary Director’s fees for 2008. Fees paid to Bakke Consulting
AS in 2008 totalled NOK 212 282.                                                                                                                Shortly after the sale ABT received an objection from a third party that the product name Zona was an infringement of a registered
                                                                                                                                                trademark. This resulted in that the agreed terms and conditions pertaining to the sale of the creams had to be renegotiated and
 16. Net currency gains/(losses)                                                                                                                that the final agreement was signed on 15 January 2009.


                                                                                                                                           27                                                                                                                                                 28
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

The collated book loss on the sale of intangible assets is as follows:                                                                        Changes in the Board of Directors
 Sales price intangible assets                                                                                              1 166 864         The same general meeting elected Thor Arne Talseth as Chairman of the Board. Kjeld Per Rimberg vacated his post as Chairman
 Book value of intangible assets                                                                                            5 136 399         of the Board but continues as a member of the Board. The other members of the Board are Bernt Theodor Walther, Anne Sofie
                                                                                                                                              Utne and Tone Bjørnov.
 Compensation for goods                                                                                                     3 080 000
                                                                                                                                              Kjetil Dahl vacated his post as member of the Board by his own request.
 Book loss on sale brand names                                                                                              9 383 263
                                                                                                                                              Changes in the administration
The compensation for goods of NOK 3.080 millions is entered as a long-term liability in the annual accounts. In addition to the               As a result of the rapidly increasing level of interest for the Company’s products in the international market, it is of prime
book loss of NOK 9.383 millions is the repayment of the partial settlement of NOK 3.0 millions, which is entered as a long-term               importance that the company increases its efforts in international sales and marketing. In order to ensure that focus in this area is
loan. The loan is non-interest bearing for three years and final terms for repayment will be clarified by 15 January 2012.                    sufficient, Thor Arne Talseth will function as COO in addition to his duties as Chairman of the Board, with a one-year period of
                                                                                                                                              notice.
20. Close associates
(a) Commitments to close associates (Note 12):                                                              2008              2007            It has been agreed that an option agreement will be entered into with the Chairman of the Board on the basis of principles to be
                                                                                                                                              agreed. The agreement has a framework of up to 3 million share options, with an earnings schedule of 50 % after 18 months from
– Key personnel                                                                                               78 710             58 144
                                                                                                                                              1.2.2009 at a redemption price of NOK 0.20 per share and the remaining 50 % 30 months after 1.2.2009 at the redemption price of
– Other close associates                                                                                     303 000         1 298 909        NOK 0.25 per share.
                                                                                                             381 710         1 357 052
                                                                                                                                              The legal action in Sweden
Commitments to close associates encompass interest on a loan from a member of management at a rate of interest of 5 % and an
                                                                                                                                              Trial Form Support (TFS) in Sweden entered a writ against the Company on 19 March 2008 with the Stockholm Municipal Court.
outstanding commitment to members of the Board who have made contributions in excess of normal board member duties in a
                                                                                                                                              The principal sum claimed was SEK 667 938 with the addition of interest from August 2006 and until payment was made. The
difficult situation for the company (note 15).
                                                                                                                                              case concerned the lack of payment of invoices for consultancy work carried out for the Company by TFS. In its side ABTs argued
                                                                                                                                              that breach of contract in that the work carried out was in part severely delayed, which had a negative effect on a planned
21. Significant events after the balance sheet date                                                                                           marketing campaign that would have resulted in considerable sales volumes in Sweden. The case has been resolved as part of
Private placing                                                                                                                               the debt settlement arrangement, and where Trial Form Support shall receive SEK 221 400, equal to 1/3 of the principal amount.
Aqua Bio Technology ASA (ABT) held an extra-ordinary general meeting on Thursday 16 April 2009.
The general meeting adopted a proposal to increase capital through the issue of 52 233 235 new shares each of face value NOK
0.20,at the subscription price of NOK 0.20. The shares were subscribed in the minutes of the general meeting by a number of
current shareholders and a number of new investors, together with a number of the Company’s creditors as part of debt settlement
in accordance with pre-subscriptions. The cash issue brought in NOK 8 306 800 while subscriptions in settlement of debts was
NOK 2 139 847, making a total of 10 446 647.

After registration in the Register of Enterprises the Company’s share capital will be NOK 14 295 194.60 divided between 71 475
973 shares each of face value NOK 0.20. The final deadline for payment pursuant to the decision of the general meeting is 30 April
2009.

The general meeting awarded the Board power of attorney to increase capital to up to 50 % of the Company’s share capital after
the capital increase, where the capital an be increased by up to NOK 1 429 519 in connection with a share issue under the option
programme and by up to NOK 5 718 076 through a share issue for other purposes.

Voluntary debt settlement
The Board acquired binding pre-subscriptions totalling NOK 6.0 millions in connection with the above-mentioned capital increase.
The premise of the pre-subscriptions was that ABT’s creditors accepted a proposal for debt settlement in accordance with a
proposal put forward by the Company. The Board passed a conditional decision on the take over of the subsidiary Kilda Biolink
AS’ claim, so that the settlement encompassed all the Group’s debts. The alternatives were either conversion of the debts into
shares, a cash payment of 20 % of the principal amount of the claim combined with an interest free loan to the Company for two
years or to receive a dividend of 35 % of the principal amount of the claim including the minimum amount. The minimum amount
was fixed at NOK 10,000.- and all creditors with claims of less than the minimum amount were excepted from the debt settlement.
Total debts to creditors were NOK 4.35 millions and the total wages demand was NOK 0.25 million. The debts to suppliers
included a number of contracted suppliers, where settlement included negotiations of the cancellation of contracts. The Group has
been successful in finalising debt settlement negotiations and has terminated long-term contractual obligations, including a legal
dispute in Sweden (Trial Form Support, see the final point in the report).

Claims converted to interest-free loans for two years equal NOK 0.996 millions. Further, ABT shall pay cash settlements totalling
NOK 2.224 mill ions to creditors and employees. This sum includes settlement of contractual obligations. Of the total debts to
suppliers contractual obligations, a total of NOK 2.930 millions of the Groups liabilities have been written off, of which contractual
obligations for the lease/rental of facilities is 78 %.

The Group’s working capital after payment of the cash settlements to creditors and payments to the Company’s advisors in
connection with the debt settlement negotiations and capital increase is NOK 4.9 millions.


                                                                                                                                         29                                                                                                                                           30
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                            ÅRSRAPPORT 2008 - AQUA BIO TECHNOLOGY ASA

Profit & Loss Accounts – the Company                                                 Balance sheet – the Company

Operating revenues                                      2008           2007
                                                                                     ASSETS
Operating revenues
Sales revenues                               5      4 783 375      7 061 801         FIXED ASSETS
Other operating income                       5              0        (33 340)        Intangible assets
Sum operating revenues                              4 783 375      7 028 461         Research & Development                                    7      669 703     2 374 789
Operating costs                                                                      Concessions, patents, licenses and similar                7      159 214       454 494
Cost of raw materials                         5      4 952 009      6 789 481        Deferred tax advantage                                   14   13 401 427     8 179 193
Payroll costs                                15      2 803 948      3 962 111
Depreciation on tangible fixed assets   5,6,7,8        972 160      1 013 427        Sum Intangible assets                                         14 230 344    11 008 476
Other operating costs                        18     14 231 418     10 705 050
Sum operating costs                                 22 959 534     22 470 072        Tangible fixed assets
OPERATING RESULT                                  (18 176 159)   (15 441 611)        Operating equipment, inventory, tools, office req. etc    6     383 338       425 052
                                                                                     Sum tangible fixed assets                                       383 338       425 052
FINANCIAL INCOME AND COSTS
Financial income                                                                     Fixed asset investment
Other earnings on interest                  16         46 449         32 808         Investments in subsidiaries                              21   38 500 000    69 998 000
Other financial income                                 43 042         53 875         Sum fixed asset investments                                   38 500 000    69 998 000
Sum financial income                                   89 491         86 683
                                                                                     SUM ASSETS                                                    53 113 681    81 431 528
Financial costs
Write-down of fixed asset investments       21      31 498 000             0         CURRENT ASSETS
Other interest costs                        16         101 404       405 205
Other financial costs                                  181 748        12 853         Stocks                                                    9    3 240 361     7 128 911
Sum financial costs                                 31 781 152       418 058         Receivables
NET FINANCIAL ITEMS                               (31 691 661)     (331 375)         Trade receivables                                         8      284 170     2 091 132
                                                                                     Other receivables                                         8    2 902 068    11 354 254
ORDINARY RESULT BEFORE TAX                        (49 867 820)   (15 772 986)        Receivables from group companies                          8    3 914 740       885 563
                                                                                     Sum receivables                                                7 100 978    14 330 949
Tax on ordinary result                      14     (5 222 234)    (4 416 436)
                                                                                     Bank deposits, cash holdings etc.                        10      120 472     1 345 334
ORDINARY RESULT                                   (44 645 586)   (11 356 547)        SUM CURRENT ASSETS                                            10 461 811    22 805 194

                                                                                     SUM ASSETS                                                    63 575 492   104 236 722
RESULT FOR THE YEAR                               (44 645 586)   (11 356 547)



TRANSFERS AND ALLOCATIONS
Uncovered losses carried forward                  (44 645 586)   (11 356 547)
SUM TRANSFERS AND ALLOCATIONS                     (44 645 586)   (11 356 547)




                                                                                31                                                                                            32
ÅRSRAPPORT 2008 - AQUA BIO TECHNOLOGY ASA                                               ÅRSRAPPORT 2008 - AQUA BIO TECHNOLOGY ASA


Balance sheet accounts - Company                                                        Changes in the Company’s shareholder’s equity
EQUITY AND LIABILITIES
                                                                                                                                                 Change in                                               Total
SHAREHOLDER’S EQUITY                                                                                                                            capital – not          Share         Uncovered       shareholder’s
                                                                                                                         Note   Share capital    registered         premium fund       losses           equity
Paid in shareholder’s equity
Nominal share capital                          11      3 848 548      3 600 948         Equity as of 1 January 2007                  150 000                    -      17 070 000      (6 103 376)      11 116 624
Share premium fund                                   111 332 154    100 437 754
Approved, unregistered capital increase        20              0     11 142 000         Profit/(loss) for the year       5                  -               -                   -     (11 356 547)    (11 356 547)
Sum paid in shareholder’s equity                     115 180 701    115 180 701         Proceeds from share issue        11         3 450 948               -         85 383 645                 -      88 834 593
                                                                                        Capital increase December 2007   20                 -      11 142 000                   -                -      11 142 000
Retained earnings
                                                                                        Costs related to share issue                        -               -         (2 015 891)                -     (2 015 891)
Uncovered losses                               17    (62 105 509)   (17 459 924)
Sum retained earnings                                (62 105 509)   (17 459 924)        Equity as of 31 December 2007               3 600 948      11 142 000         100 437 754     (17 459 924)      97 720 778


SUM SHAREHOLDER’S EQUITY                              53 075 192     97 720 778
                                                                                                                                                                     Change in
                                                                                                                                                                    capital – not      Share          Uncovered
LIABILITIES                                                                                                                         Note        Share capital        registered     premium fund       losses
LONG-TERM LIABILITIES
Other long-term liabilities                                                             Equity as of 1 January 2008                 3 600 948      11 142 000         100 437 754     (17 459 924)      97 720 778
Other long-term liabilities                    13      6 080 000      1 262 506
                                                                                        Profit/(loss) for the year       5                 -                 -                  -     (44 645 586)    (44 645 586)
Sum Other long-term liabilities                        6 080 000      1 262 506
                                                                                        Capital increase December 2007   20          247 600      (11 142 000)         10 894 400                -               0
SUM LONG-TERM LIABILITIES                              6 080 000      1 262 506         Costs related to share issue                       -                 -                  0                -               0


SHORT-TERM LIABILITIES                                                                  Equity as of 1 December 2007                3 848 548                   0     111 332 154     (62 105 509)      53 075 193
Trade creditors                                 12     2 405 409      4 516 902
Unpaid government charges and special taxes   8,12        71 593      (874 676)
Other short-term liabilities                    12     1 943 298      1 611 212
SUM SHORT-TERM LIABILITIES                             4 420 301      5 253 438

SUM LIABILITIES                                       10 500 301      6 515 944

SUM SHAREHOLDER’S EQUITY AND LIABILITIES              63 575 492    104 236 722


Bergen, 31 December 2008 / 29 April 2009




                                                                                   33                                                                                                                             34
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA

Cash flow statement – the Company
                                                                                                              Notes 2008 – The parent company
NOK                                                                                 As of 31 December
                                                                                                              1 – General information
                                                                          Note      2008          2007
Cash flows from operating activities                                                                           Aqua Bio Technology ASA comprises Kilda Biolink AS in Sandefjord and Aqua Bio Technology ASA in Bergen. Kilda Biolink AS
Result before tax                                                          5     (49 867 820) (15 772 983)     originally developed branded cosmetic goods based on functionally patented ingredients, while Aqua Bio Technology AS
Depreciations                                                                         972 160    1 013 427     developed and patented the enzyme Zonase for use in cosmetics.
Write-downs                                                               21       31 498 000            0
Losses on sale of operating equipment                                               3 113 736            0     The cosmetics business was sold in Q4 2008 and the company’s strategy now is to focus on the development and marketing of
Changes in stocks                                                                   3 888 550    1 968 963     Zonase and SMIDS to major international cosmetics companies.
Change in trade and other receivables                                               7 229 971 (1 168 899)
Change in accounts payable                                                        (2 111 493)    1 118 991     The Company is an ASA – a public limited company - based in Norway with registered offices at Framnesveien 7, Sandefjord.
                                                                                                               The Company is listed on Oslo Axess.
Net cash flow from operating activities                                           (5 276 896) (12 840 501)

                                                                                                               The consolidated financial statement was authorised for issue by the Board of Directors on 29 April 2009.
Cash flow from investment activities
Acquisitions of fixed assets                                              6,7     (2 043 816)    (253 826)
Net cash flow from investment activities                                          (2 043 816)    (253 826)
                                                                                                              2 - Summary of significant accounting principles
                                                                                                              The principal accounting policies applied in the preparation of this consolidated financial statement are set out below. These
Cash flows from financial activities                                                                          policies have been consistently applied to all the years presented, unless otherwise stated.
Proceeds from issuance of ordinary shares                                 11               -    17 228 919
Taking up (repayment) of loans                                            13       4 817 494     (741 144)    2.1 Basis of preparation
Change in other short-term liabilities                                    13       1 404 427     (486 802)    The financial statements are prepared in accordance with the Norwegian Accounting Act and generally accepted accounting
Net cash flow from financial activities                                            6 095 849    16 000 973    principles.


Change in cash and cash equivalents and utilised drawing rights                   (1 224 862)     2 906 646   2.2 Subsidiary/related companies
Cash and cash equivalents and utilised drawing rights as of 1 January     10        1 345 334   (1 561 312)   The subsidiary and related companies are recognised according to the acquisition method. The investment is assessed at the
Cash and cash equivalents and utilised drawing rights as of 31 December   10         120 472     1 345 334    acquisition cost of the shares unless depreciation has been necessary. Depreciation is implemented at fair value when the fall in
                                                                                                              value is due to reasons that cannot be regarded as transient and when it must be regarded as necessary according to generally
                                                                                                              accepted accounting principles.

                                                                                                              Dividend payments and group contributions and other payments are taken to income in the same year as they are allocated in the
                                                                                                              subsidiary. If the dividend/group contribution exceeds the portion of the result retained after acquisition, the excess amount
                                                                                                              represents a refund of invested capital, and the payments are deducted from the value of the investment in the parent company’s
                                                                                                              balance sheet.

                                                                                                              2.3 Segment reporting
                                                                                                              A business segment is part of the enterprise that delivers products or services that is subject to risks and returns that are different
                                                                                                              from those of other business areas. A geographical market (segment) is a part of the enterprise that delivers products and
                                                                                                              services within a limited geographical area that is subject to risks and return that are different from other geographical markets.

                                                                                                              The Company has identified one business segment; sale of cosmetic products, and three geographical segments; Norway,
                                                                                                              Sweden and others. As a result of the sale of the cosmetics business at the beginning of Q4 2008, segment reporting was
                                                                                                              concluded as of Q3. Financial information relating to segment reporting to and including Q3 2008 is presented in Note 5.


                                                                                                              2.4 Foreign currency translation
                                                                                                              Transactions and balance sheet items
                                                                                                              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.

                                                                                                              2.5 Tangible fixed assets
                                                                                                              Tangible fixed assets are balanced and written off over the asset’s anticipated useful life. Direct maintenance and fixed assets
                                                                                                              are recognised continuously under operating costs, while additional costs or improvements are added to the asset’s cost price
                                                                                                              and depreciated in line with the fixed asset. If the recoverable amount is lower than the balance sheet value, the recoverable
                                                                                                              amount is depreciated. Recoverable amount is the highest of net sales value and value in use. Value in use is the current value



                                                                                                         35
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                             ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


of the future cash flows that the asset is expected to generate.                                                                      2.13 Employee benefits and share-based remuneration
Tangible fixed assets are depreciated using the straight-line method over the assets expected useful life as follows:                 Retirement benefit obligations
–   Fixtures and fittings, tools, office machinery and similar assets:      3 - 5 years                                               The Company has a contribution-based pension arrangement for the employees, where the company pays an annual amount to
                                                                                                                                      the employees’ pension scheme (OTP). The company has no other obligations beyond the annual contribution. The annual
The residual values and useful lives of the assets are reviewed, and adjusted if necessary, at each balance sheet date.               contribution is regarded as the pension cost for the period.

                                                                                                                                      Share-based remunerations
2.6 Intangible assets
                                                                                                                                      The company has a share option arrangement for the employees. Share options are recognised at fair value at the date of
Research and development                                                                                                              transaction.
Costs incurred on development are balanced to the extent a future economic advantage related to the development of an
identifiable intangible fixed asset can be identified and expenses can be measured reliably. Otherwise, such costs are                2.14 Lease agreements
recognised in the profit and loss as incurred. Capitalised development is depreciated according to the straight-line method over
                                                                                                                                      Lease agreements where a significant part of the risk and return related to ownership is retained by the lessor are classified as
economic useful life. Research expenditure is recognised as an expense as incurred.
                                                                                                                                      operational lease agreements. Lease payments relating to operational agreements are recognised on a straight-line basis over the
                                                                                                                                      period of the lease.
2.7 Inventories
Inventories are recognised at the lower of cost and net realisable value. Net realisable value is the estimated sales price with      2.15 Revenue accounting
ordinary operations less estimated cost of production, marketing and distribution. Acquisition cost is determined using the FIFO
                                                                                                                                      Proceeds from the sale of goods are recognised in the income statement when the Company has delivered the goods to the
method and includes costs accrued through the purchase of the goods and the cost of bringing the goods to their current state
                                                                                                                                      wholesaler. The wholesaler may choose whatever sales channel he prefers, and is also free to set the price of the product, and
and location.
                                                                                                                                      there are no unfulfilled obligations that can affect the wholesaler’s acceptance of the product. Delivery is not complete until the
                                                                                                                                      products are dispatched to an agreed location and when the risk of loss and obsolescence is transferred to the wholesaler. In
2.8 Receivables
                                                                                                                                      addition, the wholesaler must have accepted the delivery as part of the contract, the deadline for submitting complaints must have
Trade and other receivables are recognised in the balance sheet at nominal value less an allocation for expected loss.                expired or there must be proof that all criteria related to the delivery are satisfied. Sales revenue consists of the product’s fair value
Allocation for loss is based on assessments of the individual receivable. Unspecified allocations are also made for other             minus VAT and any discounts.
receivables to cover anticipated loss as required.

2.9 Government grants                                                                                                                 3. Financial risk management
Government grants are recognised under trade and other receivables (cf. note 8). The amounts are recognised when it can be            The Company’s activities involve to a certain extent various types of financial risk. The Group’s primary risk management plan is
confirmed with reasonable certainty that the grant will be received and that appurtenant conditions followed.                         focused on the unpredictability of the capital markets, and is aimed at minimising the potential negative effects on the Group’s
                                                                                                                                      financial results. The Company does not make use of any financial derivatives to safeguard itself against financial risk.
2.10 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits on call at banks, and other short-term, easily liquidated investments       Currency risk
with a maximum 3 months original maturity. Bank overdrafts, including loans, are shown in the balance sheet under current             The company’s transactions are mainly conducted in NOK and/or SEK. Due to limited scope, the Group has not entered into
liabilities.                                                                                                                          any contracts to secure transactions in a foreign currency.


In the cash flow statement, cash and cash equivalents are as defined above, but corrected for called on overdrafts.                   Interest risk
                                                                                                                                      The company’s interest risk is related to long-term loans. Loans with floating interest rates represent an interest risk for the
2.11 Classification and assessment of balance sheet items                                                                             consolidated cash flow. The company’s interest risk is assessed on a continuous basis.

Current assets and liabilities include items that fall due for payment within one year of the date of acquisition, as well as items
                                                                                                                                      Credit risk
relating to the circulation of goods. Other items are classified as fixed assets/non-current liabilities.
                                                                                                                                      The company has a limited number of customers and thus a certain concentration of credit risk. The age composition of
                                                                                                                                      receivables is monitored continually and historically credit losses have been low. In 2008, a considerable amount has been
Current assets are assessed at the lower of acquisition cost and fair value. Current liabilities are recognised at nominal value at
                                                                                                                                      appropriated for a loss on trade receivables related to two major customers within the sale of cosmetic products. In 2008, at total
the date of entry.
                                                                                                                                      of NOK 0.71 million was booked as loss on trade receivables, of which NOK 0.95 million is unrealised loss and NOK 0.215
                                                                                                                                      million refers to a correction of a previous debt item. As at 31.12.2008, trade receivables amounted to NOK 0.3 million and thus
Fixed assets are assessed at acquisition cost less depreciation and amortisation. Non-current liabilities are recognised at
                                                                                                                                      the credit risk is regarded as low.
nominal value at the date of establishment.

                                                                                                                                      Liqudity risk
2.12 Tax
                                                                                                                                      Since the sale of cosmetics decreases in 2008, the Company’s liquidity has also gradually deteriorated. In April 2009 the
The tax cost consists of tax payable and the change in deferred tax. Deferred tax/tax advantage is computed on all differences        Company implemented a debt settlement and capital increase, which gave the Company adequate capital to continue operating
between book and taxable values of assets and liabilities. Deferred tax is computed at 28% on the basis of the temporary              for another 15 months. Refer to note 21 (Events after the balance sheet date) for further information. The board of directors will
differences that exist between book and taxable values, as well as any taxable deficit for carrying forward at year-end. Net          continue to assess the liquidity situation and implement measures when deemed necessary.
deferred tax advantage is recognised to the extent it is probable that this can be used.

                                                                                                                                      4. Use of estimates
Tax payable and deferred tax is recognised direct against equity to the extent the tax items are related to equity capital
transactions.                                                                                                                         In accordance with generally accepted accounting practice, the executive management has during the preparation of the annual
                                                                                                                                      accounts made estimates and assumptions that have influenced the financial statements and the value of assets and liabilities,
                                                                                                                                      as well as uncertain assets and liabilities at the balance sheet date.




                                                                                                                             37                                                                                                                                        38
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                          ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


5. Segment information
The Company is currently only committed to selling finished products to distributors in various geographical markets. Hence, the
                                                                                                                                   6. Tangible Fixed Assets
Company has identified sale of products as the only business segment. Sales are mainly conducted in Norway and Sweden, but
the Company has also sold products outside the Nordic region. On this basis, defined geographical segments are Norway,             Accounting Year                                                                          2008              2007
Sweden and other. The Company’s geographical segments are based on sales to the location of the external customer. The
                                                                                                                                   Opening Balance per 1 January                                                         425 052         118 025
Company is only present in Norway, and thus, no assets or liabilities are allocated to other geographical segments.
                                                                                                                                   Additions                                                                             313 832         534 929
The Segment Results for 2008 are as follows:                                                                                       Depreciation, Devaluation                                                            (355 546)       (227 902)
                                                                                                                                   Value Recognized in the Balance Sheet per 31 December                                 383 338         425 052
                                                              Norway           Sweden             Other              Total
Operating Revenue                                                 696 996        3 901 179           185 200          4 783 375
                                                                                                                                   Accumulated
Cost of Sales                                                   (370 534)       (4 488 874)          (92 600)        (4 952 009)
                                                                                                                                   Acquisition Costs                                                                   1 006 486         692 654
Gross Earnings                                                    326 462         (587 695)           92 600          (168 634)
Operating Costs                                                                                                    (16 988 541)    Accumulated Depreciation, Devaluation                                                (623 148)       (267 602)
Depreciation                                                                                                         (1 018 984)   Value Recognized in the Balance Sheet per 31 December                                 383 338         425 052
Operating Result                                                                                                   (18 176 159)
Net Financial Income/(Costs)                                                                                       (31 691 661)    Economic Life                                                                       3 - 5 years     3 - 5 years
Pre-Tax Result                                                                                                     (49 867 820)
                                                                                                                                   Depreciation Method                                                                     Linear            Linear
Tax                                                                                                                  (5 222 234)
Financial Result                                                                                                   (44 645 586)

                                                                                                                                   7. Intangible Assets
The reason for the negative gross earnings in Sweden is the sale of copyrights to the Swedish company Zona Nordic AB in Q4
                                                                                                                                                                                                     Patents and       Developmen
which is described above and in note 19.
                                                                                                                                                                                              Note    Licences           t Costs        Total
                                                                                                                                   Per 1 January 2007
The Segment Results for 2007 are as follows:
                                                                                                                                   Cost                                                                   539 869         3 364 425     3 904 294
                                                              Norway           Sweden             Other              Total
                                                                                                                                   Accumulated Depreciation and Devaluation                              (49 636)          (381 976)    (431 612)
Operating Revenue                                               2 812 214        2 427 639         1 788 608          7 028 461
                                                                                                                                   Value Recognized in the Balance Sheet per 1 January 2007               490 233         2 982 449     3 472 682
Cost of Sales                                                 (3 299 896)       (2 027 075)      (1 462 510)         (6 789 481)
Gross Earnings                                                  (487 682)          400 564           326 098            238 980
                                                                                                                                   Accounting Year 2007
Operating Costs                                                                                                    (14 667 161)
                                                                                                                                   Value Recognized in the Balance Sheet per 1 January 2007               490 238         2 982 449     3 472 687
Depreciation                                                                                                         (1 013 428)
                                                                                                                                   Additions                                                                       -        142 126       142 126
Operating Result                                                                                                   (15 441 611)    Depreciation                                                          (35 744)          (749 786)    (785 530)
Net Financial Income/(Costs)                                                                                          (331 375)
                                                                                                                                   Recorded per 31 December 2007                                          454 494         2 374 789     2 829 283
Pre-Tax Result                                                                                                     (15 772 986)
Tax                                                                                                                  (4 416 436)   Per 31 December 2007
Financial Result                                                                                                   (11 356 547)    Cost or Re-Assessed Value                                              539 874         3 506 551     4 046 425
                                                                                                                                   Accumulated Depreciation and Devaluation                              (85 380)        (1 131 762)   (1 217 142)
                                                                                                                                   Value Recognized in the Balance Sheet per 1 January 2007               454 489         2 374 789     2 829 283




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ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                               ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


7. Intangible Assets, (Cont.)
                                                                                                                                       8. Accounts Receivable and other Receivables
                                                                                       Patents and        Developmen                                                                                                                            2008             2007
                                                                                        Licences            t Costs        Total       Accounts Receivable                                                                                      1 234 170       2 122 292
Per 1 January 2008
                                                                                                                                       Provision for Future Losses on Accounts Receivable                                                       (950 000)        (31 160)
Cost or Re-Assessed Value                                                                    539 874        3 506 551     4 046 425
                                                                                                                                       Accounts Receivable - Net                                                                                 284 170        2 091 132
Accumulated Depreciation and Devaluation                                                     (85 380)      (1 131 762)   (1 217 142)
Value Recognized in the Balance Sheet per 1 January 2008                                     454 494        2 374 789     2 829 283    Pre-Payments                                                                                             2 606 181         110 667
                                                                                                                                       Other Current Receivables                                                                                 252 257          927 971
Accounting Year 2008                                                                                                                   Funds Agreed, Not Paid                                                                                            -     11 142 000
Value Recognized in the Balance Sheet per 1 January 2008                                     454 949        2 374 789     2 829 283    Receivables from Related Parties                                                                            44 430          59 179
Additions                                                                                            -        710 618       710 618    Per 31 December                                                                                          3 187 037      14 330 949
Disposals                                                                                  (275 620)       (1 818 750)   (2 094 375)
Depreciation                                                                                 (19 660)        (596 954)     (616 614)
Recorded per 31 December 2008                                                                159 214          669 703       828 917
                                                                                                                                       Accounts Receivable
Per 31 December 2008
                                                                                                                                       Accounts receivable comprise non-interest bearing receivables which are primarily granted with
Cost                                                                                         264 254        2 398 414     2 662 668    30-days credit. Customers are invoiced after an order is received and made ready for dispatch.
Accumulated Depreciation and Devaluation                                                   (105 040)       (1 728 711)   (1 833 751)   Provisions for future losses are based on an assessment of each individual receivable.
Value Recognized in the Balance Sheet pr 31 December 2008                                    159 214          669 703       828 917    Pre-Payments
                                                                                                                                       Pre-payments comprise payments such as deposits and licences. Out of the pre-payments
Estimated Life                                                                           20 years          5-10 years                  entered, MNOK 2.481 is related to the purchase of Zonase from Aquazyme Technology AS,
Depreciation Method                                                                       Linear             Linear                    (formerly Zonase AS).
                                                                                                                                       Other Current Receivables
Intangible Assets
In connection with the sale of Zona and Kilda including related rights, the Company has disposed of rights and licenses entered at     Other current receivables include VAT deductions and other accumulated expenses.
MNOK 0.275 as well as development costs recognized in the balance sheet related to Zona and Kilda equalling MNOK 4.873.                Receivables from Related Parties
During 2008 an additional MNOK 0.710 was recognized in the balance sheet as development costs.                                         Receivables from related parties comprise among other things payment transfers to employees
                                                                                                                                       for use on business trips.
Refer to note19 for further information concerning the sale of Zona and Kilda including related rights.
                                                                                                                                       Per 31 December, age distribution of outstanding receivables appears as follows:

Patents and Licences
Patents relate to costs in connection with the acquisition of new patents. Patents are depreciated over the estimated expected life                                                                                                                  2008            2007
of the respective patent. Following the sale of Zelda and Kilda, the entered patent values are exclusively related to Zonase and       Total                                                                                                    1 234 170       2 122 292
SMIDS.                                                                                                                                 Neither Overdue nor Devalued                                                                                      -      1 398 528
                                                                                                                                       < 30 days                                                                                                         -           1 571
Development Costs
Development costs are all costs related to the development of products for sale. This is an ongoing process that runs from the end     31 – 60 days                                                                                                      -        257 223
of the research phase until the products are introduced to the market and includes subsequent product improvements. The                61 – 90 days                                                                                                      -                 -
development costs are depreciated from and including the month in which the respective products are introduced to the market           > 90 days                                                                                                1 234 170         464 970
and over a period of 5 to 10 years depending on the product.

As mentioned above, development costs primarily include costs related to the purchase of services from research institutes             9. Inventories
and laboratories for better documentation of the positive effects of the Zonase enzyme, and to exclude the possibility of any                                                                                                                    2008            2007
negative effects. This documentation is required in order to be able to introduce the products and Zonase to the international
                                                                                                                                       Raw Materials                                                                                            1 452 333       1 899 951
market. The major cosmetic companies which represent the Company’s future customers will require such documentation
before they are willing to enter into discussions concerning the use of Zonase in their own products.                                  Work in Progress                                                                                            10 944         863 077
                                                                                                                                       Finished Goods                                                                                           1 777 083       4 365 883
                                                                                                                                                                                                                                                3 240 361       7 128 911


                                                                                                                                       In connection with the sale of Zona and Kilda, finished goods related to these two series of products were sold. All inventory in
                                                                                                                                       the Company balance as of 31 December 2008 is related to Zonase in a more or less processed form. Refer to note 19 for
                                                                                                                                       further details concerning this sale.




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 ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                          ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA




10. Cash and Cash Equivalents                                                                                                        11. Share capital (cont.)
                                                                                                      2008           2007            Two key employees, Ståle Bergum (CFO) and Dag Oppen-Berntsen (R&D Director) were awarded options in January 2008 of
                                                                                                                                     purchasing 150 000 shares each at the price NOK 9.90 per share. Half of the options can be invoked from 1 January 2010 and
Cash at Bank and on Hand                                                                                77 241      1 088 030
                                                                                                                                     the remainder from 1 January 2011. The options expire on 31 December 2011.
Term Bank Deposits                                                                                      43 231        257 303
                                                                                                       120 472      1 345 333        The options were priced using the Black & Scholes model adjusted for the probability of early implementation in accordance
                                                                                                                                     with clauses in the agreements. As of 31 December 2008 NOK 0.3 millions has been allocated in connection with the option
                                                                                                                                     agreements in that the share price has been reduced during the course of the year.
Cash and cash equivalents include the following for the purposes of the cash flow statement:
                                                                                                      2008           2007            Development of share options in 2008:
Cash and Cash Equivalents                                                                              120 472      1 345 333          Outstanding         Allotted in       Exercised in       Expired in the   Outstanding   Redeemable      Agreed      Real worth
                                                                                                                                       at 01.01.08         the period         the period           period        at 31.12.08   on 31.12.08   share price   at 31.12.08
Bank Overdrafts                                                                                               -               -
                                                                                                                                             310 000                     -                  -        206 667         103 333             -     NOK 7,20        14.05.2012
                                                                                                       120 472      1 345 333
                                                                                                                                                       -      300 000                       -                -       300 000             -     NOK 9,90        01.01.2012
Term bank deposits comprise tax deductions for employees deposited in a dedicated account.
                                                                                                                                     There were no other share option schemes as of 31 December 2008.

  11. Share capital
                                                                                                                                     Overview of the largest shareholders in the Company as of 31 December 2008:
                                                                     No. of           Ordinary         Nominal      Total share                                                                                                               No. Of shares         % share
                                                                     shares            shares           value         capital
                                                                                                                                     Zym Holding AS *                                                                                              4 456 250        23,16 %
  As of 31 December 2006                                               1 500 000        1 500 000            0,10       150 000      Bolaks AS                                                                                                     3 624 750        18,84 %
  –   Proceeds from shares issued                                         50 000           50 000            0,10           5 000    Adeler Capital AS (kontrolleres av Einar O. Vangsnes, previous Managing Director)                             1 747 757         9,08 %
  –   Revaluation of share capital (scrip issue)                                -       1 550 000            1,00     1 550 000      Bluefield AS (controlled by Kjetil Dahl, member of the Board)                                                 1 121 725         5,83 %
  –   Share issue related to acquisition                               1 550 000        1 550 000            1,00     3 100 000      Pecunia Forvaltning                                                                                           1 000 000         5,20 %
  –   Proceeds from shares issued                                        147 070          147 070            1,00     3 247 070      Molvær Ivar Arvid                                                                                               801 665         4,17 %
  –   Conversion of debt to equity capital                                40 000           40 000            1,00     3 287 070      Katalysator AS                                                                                                  480 362         2,50 %
  –   Share split                                                     16 435 350       16 435 350            0,20     3 287 070      Svenska Handelsbanken, Nominee                                                                                  474 000         2,46 %
  –   Proceeds from shares issued                                                                                                    Aquazyme Technology AS                                                                                          387 888         2,02 %
                                                                       1 569 388        1 569 388            0,20     3 600 948
  As of 31 December 2007                                                                                                             MP Pensjon                                                                                                      330 000         1,71 %
                                                                      18 004 738       18 004 738            0,20     3 600 948
  –   Proceeds from shares issued                                                                                                    Kjelstadli Jarl                                                                                                 289 331         1,50 %
                                                                       1 238 000        1 238 000            0,20     3 848 548
                                                                                                                                     Barske Gleder AS                                                                                                250 000         1,30 %
  As of 31 December 2008                                              19 242 738       19 242 738            0,20     3 848 548
                                                                                                                                     Tenvik Diagnostikk og Forvaltning AS                                                                            250 000         1,30 %
                                                                                                                                     Tannlege Per Hagen AS                                                                                           248 855         1,29 %
  The total number of affirmative ordinary shares as of 31 December 2008 is 19 242 738 (2007: 18 004 738 shares) each of face        Gullas AS                                                                                                       247 000         1,28 %
  value NOK 0.20 per aksje. All issued shares are fully paid up. The Company has a single share class and all shares represent
                                                                                                                                     CAR ASA (konkursbo)                                                                                             223 000         1,16 %
  one vote.
                                                                                                                                     Ukranor AS                                                                                                      219 000         1,14 %
  Voting rights for transferred shares can be invoked when the transfer is registered in Verdipapirsentralen (VPS) – the             Krogsrud Invest AS                                                                                              175 000         0,91 %
  Norwegian Central Securities Depository – within the deadline for notification to the General Meeting. Pursuant to Norwegian       Nordea Bank Norge AS                                                                                            169 800         0,88 %
  legislation votes can only be cast for shares that are registered in the owner’s name. If the shareholder is prevented by
                                                                                                                                     Oslo og Follo Kjeveortopedi AS                                                                                  166 200         0,86 %
  circumstance from casting his/her vote, at the General Meeting, the shareholder can appoint a representative (award power of
  attorney) to vote on his/her behalf.                                                                                               Total                                                                                                        16 662 583        86,59 %
                                                                                                                                     Others                                                                                                        2 580 155        13,41 %
  In connection with the implementation of a public share issue prior to stock exchange listing in January 2008, 1 238 000 new       Total No. Of shares                                                                                          19 242 738        100,0 %
  shares were registered in the Brønnøysund registers. The share issue was implemented in December 2007, with payment and
  registration in Brønnøysund in January 2008. We refer to note 21 (Events after the balance date) for further information about
                                                                                                                                    * 11 November 2008 a demerger of shares of the shares in Zym Holding AS was implemented. The new companies were notified
  the Company’s share capital.
                                                                                                                                    to the Brønnøysund Registers simultaneously. The demerger was not registered in the VPS by the close of 2008.

  Share options
  In accordance with a previous agreement with the Company dated 8 May 2007, Kjell H. Bakke (previously Chairman of the
  Board) holds an option to purchase 310 000 shares at a cost of NOK 7.20 per share. The option can be invoked from 8 May
  2007 to and including 14 May 2012. Bakke vacated his position of Chairman of the Board in August 2008 and thus lost his right
  to 2/3 of the options. The remaining 1/3 of the options are retained.




                                                                                                                       43                                                                                                                                      44
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                            ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


11. Share capital (cont.)                                                                                                            14. Tax payable and deferred tax
                                                                                                                                      Taxes                                                                                                2008              2007
Zym Holding AS was split as follows:
                                                                                                                          57,08 %     Tax payable                                                                                                     -              -
 Zym Holding AS by Bernt Th. Walther (member of the Board)
 A-Zym AS by Arild Roar Rasmussen (Managing Director from 1 February 2008)                                                            Change in deferred tax                                                                              (5 143 550)      (4 416 436)
                                                                                                                          20,87 %
                                                                                                                                      Taxes                                                                                               (5 143 550)      (4 416 436)
 T-Zym AS, by Tom Stemre                                                                                                  16,52 %
 Prozym AS, by Chun Jun Rong                                                                                               5,53 %                                                                                                          2008              2007
                                                                                                                                      Basis for calculating tax
Shares owned by members of the Board of Directors and key personnel as of 31 December 2008:                                           Profit/(loss) before tax                                                                           (49 867 820) (15 772 986)
 Name                                                          Position/post                                        No. Of shares     Permanent differences                                                                                 (281 015)      (2 799 851)
 Kjeld P. Rimberg (via Kjeld Rimberg & Co AS)                     Retiring Chairman                                       15 000      Write-downs                                                                                         31 498 000
 Bernt Th. Walther (via Zym Holding AS)                           Board member                                         2 543 628      Change in temporary differences                                                                     18 650 835       18 572 837
 Kjetil Dahl (via Bluefield AS)                                   Board member                                         1 121 725      Basis for calculating tax                                                                                       -              -
 Arild R. Rasmussen *                                             Managing Director                                        978 019
                                                                  Managing Director (to and including                                 Temporary differences                                                                                2008              2007
 Einar O. Vangsnes (via Adeler Capital AS)                        31.01.08)                                            1 747 757      Stocks                                                                                                          -    (1 491 672)
 Dag Oscar Oppen-Berntsen (via Cardinal Science AS)               Director of Research                                     159 000    Operating assets                                                                                       (15 258)          12 547
* Of which 930 019 shares via Zym Holding AS                                                                                          Receivables                                                                                           (836 362)         138 623
                                                                                                                                      Allocations and commitments/obligations                                                                         -     (944 250)
                                                                                                                                      Conveyable deficit                                                                                 (47 010 621) (26 926 658)
 12. Trade payables and other current liabilities                                                                                     Total temporary differences at 31 December                                                         (47 862 241) (29 211 410)
                                                                                                        2008              2007
 Trade payables                                                                                         2 405 409      4 516 902
                                                                                                                                      Deferred tax/tax advantage                                                                           2008              2007
 Owed to related parties (Note 20)                                                                        78 710            24 998    Stocks                                                                                                          -       417 668
 Social security, VAT and other taxation payable                                                         103 413           271 711    Operating assets                                                                                            4 272        (3 513)
                                                                                                                                      Receivables                                                                                            234 181          (38 814)
 Accrued expenses                                                                                       1 832 768          439 837    Allocations and commitments/obligations                                                                         -       264 390
                                                                                                                                      Conveyable deficit                                                                                  13 162 974        7 539 464
                                                                                                        4 420 301      5 253 438      Total deferred tax/tax advantage at 31 December                                                     13 401 427        8 179 195
Accrued expenses encompass accrued, unpaid holiday pay, allocated Directors’ fees and various other accrued costs, incl.
Interest due on loans from close associates.                                                                                          Calculation of effective taxation rate                                                               2008              2007


 13. Loans                                                                                                                            Result before tax                                                                                 (18 369 820)      (15 772 986)
                                                                                                                                      Tax based on applied tax rate (28%)                                                                (5 143 550)       (4 416 436)
                                                                                                        2008              2007
                                                                                                                                      Effect of permanent differences                                                                        (78 684)       (783 958)
 Long-term loans
                                                                                                                                      Effect of temporary differences                                                                      5 376 140        5 200 394
 Long-term allocations                                                                                  3 080 000                -    Effect of government grants                                                                          (153 906)                 -
 Loans to credit institutions and other long-term liabilities                                           3 000 000      1 262 506      Taxes                                                                                                          -               -
                                                                                                        6 080 000      1 262 506      Effective taxation rate                                                                                  0,0 %             0,0 %
 Short term loans
                                                                                                                                     At year-end, the Group had a conveyable deficit that could be used against future taxable income. This relates to a deferred tax
 Overdraft facility                                                                                             -                -
                                                                                                                                     advantage that with predominant probability will reduce future tax liabilities.
 Debentures and other short-term loans                                                                          -                -
 Shares issued but not registered in the Brønnøysund Register of Enterprises by year-end                        -                -
                                                                                                                -                -
 Sum loans                                                                                              6 080 000      1 262 506


 Long-term loans and other commitments are linked in the entirety to the sale of Zona and Kilda with the accompanying rights
 (note 19). The loan of NOK 3 000 000 is interest-free for three years, taken up at real worth and terms and conditions for
 payment shall be clarified by 15 January 2012.




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ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                     ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


 15. Payroll costs                                                                                                                            The Board of Director’s statement relating to the fixing of salaries and other remunerations to key personnel.
                                                                                                           2008              2007             The Company is currently in a situation where running costs are higher than revenues. It is therefore important for the Company to
 Wages and salaries                                                                                                                           maintain total costs, including the salaries of key personnel, at a level that can be justified based on the Company's financial position.
                                                                                                           1 533 516         2 536 996

 Employer’s contribution                                                                                     211 647            359 914       Pursuant to the power of attorney awarded by the General Meeting on 16 April 2009, the Board can stipulate terms and conditions for
 Pension costs                                                                                                43 287             45 187       future option programmes that encompass key employees and members of the Board up to 10 % of share capital stipulated by the
                                                                                                                                              same General Meeting.
 Other payments                                                                                               16 399          1 020 014

                                                                                                           2 803 948          3 962 111       The Group has a mandatory obligation to have a pension scheme pursuant to the Act on mandatory pensions. The Group’s pension
                                                                                                                                              scheme meets with the requirements laid down in this act.
 No. of employees                                                                                                   4                    5
 No. of man-years                                                                                                  3,8                  4,4   Report for 2008.
                                                                                                                                              Remunerations to the Company’s Managing Director and other key personnel in 2008 were based on the same principles as described
                                                                                                                                              above. Share options for key personnel (note 11) awarded in January 2008 were based on power of attorney awarded to the Board
 Auditor’s remuneration                                                                                        2008                 2007      within a framework of 825 000 shares at the nominal worth of NOK 165 000. Apart from the said allocations, the power of attorney has
 Auditor’s fees                                                                                              120 000            118 000       not been used in 2008. After the turn of the year the power of attorney was replaced by a new power of attorney (see note 21). Please
 Tax advice                                                                                                          -          100 000       also refer to note 11 for information concerning options to key personnel in the Company.
 Authorisation fees                                                                                           27 000             15 000
 Other non-audit related services                                                                            269 689            627 136       As of 31 December 2008 there were no agreements on severance arrangements for the Managing Director or members of the Board.
 Total                                                                                                       416 689            860 136       No agreements on bonuses or options for the Managing Director or Chairman of the Board have been entered into since the balance
 All amounts are ex VAT. Other services supplied by the Auditor encompass amongst other things assistance with part-year                      day date.
 reports and the annual accounts.
                                                                                                               2008                 2007      Remunerations to members of the Board encompass remunerations to 4 members of the Board for tasks completed in addition to the
 Other remunerations                                                                                                                          work of the Board (NOK 303 000) and allocations for ordinary director’s fees in 2008 (NOK 506 000). In that the company has been in
 Remunerations to key personnel (see separate matrix)                                                       725 449          1 075 054        an integration phase after the purchase of Kilda Biolink AS in 2007, Kjell H. Bakke (previous Chairman), had through his company
                                                                                                                                              Bakke Consulting AS, a monthly fee of NOK 50 000 as compensation for work in and on behalf of the Company. This arrangement was
 Remunerations to members of the Board                                                                     1 021 282            450 000       discontinued in May 2008, and K.H.Bakke has renounced the ordinary Director’s fees for 2008. Fees paid to Bakke Consulting AS in
                                                                                                                                              2008 totalled NOK 212 282.
 Total                                                                                                     1 742 399          1 525 054

                                                                                                                                              16. Net currency gains/(losses)
 Remunerations to key personnel                                                                     2008
                                                                                                                                              Currency differences (taken to expenses/income) in the financial statements are as follows:
                                                                  Salary           Pension                 Other             Sum
                                                                                                                                                                                                                                                              2008            2007
 Einar O. Vangsnes *                                                 66 667                1 333                   333            68 333
                                                                                                                                              Currency gains                                                                                                     44 145           53 875
 Arild R. Rasmussen**                                               785 955                     -                    -          785 955
 Ståle Bergum                                                       640 310               12 806               4 000            657 116       Currency loss                                                                                                   (181 799)        (11 439)
 Sum 2008                                                         1 492 932               14 140               4 333          1 511 405
 Sum 2007                                                         1 519 975               30 400               7 694          1 558 069       Net currency gains/(loss)                                                                                      (137 654)            42 436
* Einar Otto Vangsnes was Managing Director until 31 January 2008
** Arild R. Rasmussen took over as Managing Director from 1 February 2008. He is hired in from Bolaks AS. Reported
remunerations are based on invoices received from Bolaks AS in 2008. His remuneration from Bolaks AS in 2008 was NOK 577 130.                 17. Earnings per share
As of 31 December 2008 there were no agreements on severance arrangements for the Managing Director or members of the Board.
                                                                                                                                              (a) Earnings per share
                                                                                                                                              Earnings per share is calculated by dividing the part of the annual result that is ascribed to the company's shareholders with a
 Remunerations to members of the Board of Directors                                                    2008                                   weighted average number of issued ordinary shares through the year less own shares.
                                                                              Salary and other      Director’s fees                                                                                                                                       2008               2007
                                                                               remunerations               *                Sum               Result for the year ascribed to the company's shareholders                                                (44 645 586)      (10 676 689)
 Kjell H. Bakke (retired from the Chair in August 2008)                                 212 282                      -          212 282       Weighted average number of shares issued *                                                                  19 219 060        12 971 767
 Kjeld P. Rimberg (new Chairman from August 2008)                                       195 000                      *                    *
                                                                                                                                              Earnings per share (NOK per share)                                                                               (2,32)             (0,82)
 Kjetil Dahl                                                                             70 000                      *                    *
 Bernt Th. Walther                                                                              -                    *                    *
 Anne-Sofie Utne                                                                         22 000                      *                    *   (b) Diluted earnings per share
 Tone Bjørnov (new member of the Board from February 2008)                               16 000                      *                    *   The calculation of diluted earnings per share uses the weighted average number of issued ordinary shares in circulation adjusted
 Sum 2008                                                                               515 282              506 000          1 021 282       for the effect of conversion of all potential shares that could result in dilution. Share options are the only shares that can potentially
 Sum 2007                                                                               375 000               75 000            450 000       result in dilution. If a negative result is achieved invoking potential shares will have a diluting effect. After GRS one shall ignore the
                                                                                                                                              effect of potential shares that result in dilution so that the calculation shows the same result per share as prior to the effect.
* Distribution of fees to the Board of Directors for 2008 has not been finalised. The Election Committee will do this at the earliest
                                                                                                                                              * The number of shares is adjusted to be comparable with the number of shares after the demerger implemented in September
opportunity.
                                                                                                                                              2007 with a face value of NOK 0.20.




                                                                                                                           47                                                                                                                                                48
ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                   ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


18. Obligations and commitments                                                                                                             22. Significant events after the balance sheet date
In connection that from the turn of the year (note 21) the Group has implemented debt settlement negotiations with resulting
                                                                                                                                             Private placing
agreement, operational lease agreements have been brought to a close. The Company’s agreements on the lease/rental of
facilities and equipment have also been terminated a part of the debt settlement agreement. The Company’s                                    Aqua Bio Technology ASA (ABT) held an extra-ordinary general meeting on Thursday 16 April 2009.
obligations/commitments are linked to Zona Nordic AB (note 13, note 19) and the company has long-term rights to the SMIDS technology,        The general meeting adopted a proposal to increase capital through the issue of 52 233 235 new shares each of face value NOK
with annual costs at NOK 200 000.                                                                                                            0.20,at the subscription price of NOK 0.20. The shares were subscribed in the minutes of the general meeting by a number of
                                                                                                                                             current shareholders and a number of new investors, together with a number of the Company’s creditors as part of debt settlement
Apart from that which is entered in the presented accounts as of 31 December 2008 , the Company has committed itself in                      in accordance with pre-subscriptions. The cash issue brought in NOK 8 306 800 while subscriptions in settlement of debts was NOK
connection with the debt settlement agreement (note 21) to settle creditors’ claims totalling NOK 0.996 million by 1 April 2011.             2 139 847, making a total of 10 446 647.


Future collated minimum payments in connection with the above-mentioned lease/rental agreements are as follows:                              After registration in the Register of Enterprises the Company’s share capital will be NOK 14 295 194.60 divided between 71 475 973
                                                                                                   2008                      2007            shares each of face value NOK 0.20. The final deadline for payment pursuant to the decision of the general meeting is 30 April
Due date within 1 year                                                                                       627 500         509 531         2009.

Due date between 1 and 5 years                                                                                       -          48 750       The general meeting awarded the Board power of attorney to increase capital to up to 50 % of the Company’s share capital after the
                                                                                                                                             capital increase, where the capital an be increased by up to NOK 1 429 519 in connection with a share issue under the option
Due date later than 5 years                                                                                          -                  -    programme and by up to NOK 5 718 076 through a share issue for other purposes.
                                                                                                              627 500         558 281
                                                                                                                                             Voluntary debt settlement
                                                                                                                                             The Board acquired binding pre-subscriptions totalling NOK 6.0 millions in connection with the above-mentioned capital increase.
19. The sale of Zona and Kilda with accompanying rights                                                                                      The premise of the pre-subscriptions was that ABT’s creditors accepted a proposal for debt settlement in accordance with a
An agreement was entered into with Zona Nordic AB on the sale of Zona and Kilda (the Group’s own brand cosmetic creams)                      proposal put forward by the Company. The Board passed a conditional decision on the take over of the subsidiary Kilda Biolink AS’
and accompanying rights on 7 October 2008. As part of the sale agreement for the brands, Zona Nordic AB has signed an                        claim, so that the settlement encompassed all the Group’s debts. The alternatives were either conversion of the debts into shares,
agreement with ABT to purchase Zonase (as an ingredient in the creams).                                                                      a cash payment of 20 % of the principal amount of the claim combined with an interest free loan to the Company for two years or to
                                                                                                                                             receive a dividend of 35 % of the principal amount of the claim including the minimum amount. The minimum amount was fixed at
Shortly after the sale ABT received an objection from a third party that the product name Zona was an infringement of a                      NOK 10,000.- and all creditors with claims of less than the minimum amount were excepted from the debt settlement. Total debts to
registered trademark. This resulted in that the agreed terms and conditions pertaining to the sale of the creams had to be                   creditors were NOK 4.35 millions and the total wages demand was NOK 0.25 million. The debts to suppliers included a number of
renegotiated and that the final agreement was signed on 15 January 2009.                                                                     contracted suppliers, where settlement included negotiations of the cancellation of contracts. The Group has been successful in
                                                                                                                                             finalising debt settlement negotiations and has terminated long-term contractual obligations, including a legal dispute in Sweden
The collated book loss on the sale of intangible assets is as follows:                                                                       (Trial Form Support, see the final point in the report).
 Sales price intangible assets                                                                                               1 166 864
                                                                                                                                             Claims converted to interest-free loans for two years equal NOK 0.996 millions. Further, ABT shall pay cash settlements totalling
 Book value of intangible assets                                                                                             2 034 706
                                                                                                                                             NOK 2.224 mill ions to creditors and employees. This sum includes settlement of contractual obligations. Of the total debts to
 Compensation for goods                                                                                                      3 080 000
                                                                                                                                             suppliers contractual obligations, a total of NOK 2.930 millions of the Groups liabilities have been written off, of which contractual
 Book loss on sale brand names                                                                                               6 281 570       obligations for the lease/rental of facilities is 78 %.

The compensation in goods of NOK 3.080 millions is entered as a long-term liability in the annual accounts. In addition to the               The Group’s working capital after payment of the cash settlements to creditors and payments to the Company’s advisors in
book loss of NOK 9.383 millions is the repayment of the partial settlement of NOK 3.0 millions, which is entered as a long-term              connection with the debt settlement negotiations and capital increase is NOK 4.9 millions.
loan. The loan is non-interest bearing for three years and final terms for repayment will be clarified by 15 January 2012.
                                                                                                                                             Changes in the Board of Directors
                                                                                                                                             The same general meeting elected Thor Arne Talseth as Chairman of the Board. Kjeld Per Rimberg vacated his post as Chairman
20. Close associates
                                                                                                                                             of the Board but continues as a member of the Board. The other members of the Board are Bernt Theodor Walther, Anne Sofie
(a Commitments to close associates (Note 12):                                                                2008            2007
                                                                                                                                             Utne and Tone Bjørnov. Kjetil Dahl vacated his post as member of the Board by his own request.
– Key personnel                                                                                               78 710            58 144
                                                                                                                                             Changes in the administration
– Other close associates                                                                                      303 000           24 988
                                                                                                                                             As a result of the rapidly increasing level of interest for the Company’s products in the international market, it is of prime importance
                                                                                                              381 710           83 132       that the company increases its efforts in international sales and marketing. In order to ensure that focus in this area is sufficient,
                                                                                                                                             Thor Arne Talseth will function as COO in addition to his duties as Chairman of the Board, with a one year period of notice.

Commitments to close associates encompass interest on a loan from a member of management at a rate of interest of 5 % and
                                                                                                                                             It has been agreed that an option agreement will be entered into with the Chairman of the Board on the basis of principles to be
an outstanding commitment to members of the Board who have made contributions in excess of normal board member duties in
                                                                                                                                             agreed. The agreement has a framework of up to 3 million share options, with an earnings schedule of 50 % after 18 months from
a difficult situation for the company (note 15).
                                                                                                                                             1.2.2009 at a redemption price of NOK 0.20 per share and the remaining 50 % 30 months after 1.2.2009 at the redemption price of
                                                                                                                                             NOK 0.25 per share.
21. Down-writing of shares in subsidiary
                                                                                                                                             The legal action in Sweden
The accounts for 2008 show a write-down of the shares in the subsidiary. The background for this is that the worth of the
                                                                                                                                             Trial Form Support (TFS) in Sweden entered a writ against the Company on 19 March 2008 with the Stockholm Municipal Court.
underlying assets that were assessed in connection with the purchase of Kilda Biolink AS in 2007 have been written down in the
                                                                                                                                             The principal sum claimed was SEK 667 938 with the addition of interest from August 2006 and until payment was made. The case
Group. After a thorough assessment f the worth of the shares in the subsidiary have been written down by NOK 31 498 000.
                                                                                                                                             concerned the lack of payment of invoices for consultancy work carried out for the Company by TFS. In its side ABTs argued that



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 breach of contract in that the work carried out was in part severely delayed, which had a negative effect on a planned marketing
 campaign that would have resulted in considerable sales volumes in Sweden. The case has been resolved as part of the debt
 settlement arrangement, and where Trial Form Support shall receive SEK 221 400, equal to 1/3 of the principal amount.


 Statement by the Members of the Board of Directors and the Managing Director
 We hereby confirm that the Annual Accounts for the period 1 January to 31 December 2008 have, to the best of our knowledge
 and belief, been prepared in accordance with the applicable accounting standards and that the information contained in the
 accounts provides a true picture of the Company’s and Group’s assets, liabilities, financial position and result in the entirety and
 that the information contained in the Annual Report provides a true and correct overview of the development, result and status
 of the Company and Group, together with a description of the key areas of risk and elements of uncertainty the Company is
 currently facing.

 Sandefjord / Bergen, 31 December 2008 / 29 April 2009




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CORPORATE GOVERNANCE                                                                                                                    In case of material transactions between the Company and shareholders, management or their related parties, the Board will
                                                                                                                                        ensure that there if required is performed an independent valuation of the said transactions by a third party.

1. Introduction                                                                                                                         5. Transferability of shares
Aqua Bio Technology ASA (ABT) deems it very important that investors, contractors, partners and others have confidence in the           There are no general limitations on transfer of the Company’s Shares.
Company’s ability to run its business according to sound principles and ethical guidelines. Core values in the Company are
accountability, honesty and integrity. These are values which are important in establishing a good reputation and realizing ABT’s       6. General Meeting
goals.                                                                                                                                  All shareholders have the right to propose topics for the agenda, as well as meet, speak and vote at the General Meeting.
                                                                                                                                        According to Norwegian law physical representation by the shareholder or its authorised representative is required in order to
It is important for ABT that there is sufficient independence between the different entities within the Company, and that the           vote. In addition shares must be registered in the Norwegian Central Securities Depository.
Company is run according to principles promoting ethical and sustainable business practices.
                                                                                                                                        Written notice convening the General Meeting together with agenda and all relevant documentation will be sent all shareholders
Aqua Bio Technology ASA, which is the Group’s mother company, is the Company within which the decisive board activities and             two weeks in advance. The General Meeting elects the board, decides the board’s remuneration and approves the yearly
daily management of the Group takes place. The Group’s governing structure is built upon Norwegian corporate law, articles of           financial report and the Board’s proposal for dividends distribution. Furthermore it elects the Company’s auditor, approves the
association, guidelines for the board and guidelines for the management of the Company approved by the board. The Company               auditor’s fee and decides upon remaining issues listed published agenda for the meeting or which results from the Norwegian
has developed ethical guidelines included in the Company’s principles for corporate governance. In connection with the recent           Public Limited Companies Act. When electing members to the Board, the General Meeting also elects the Chairman. The
share capital increase the Extraordinary General Meeting resolved to deviate from the principles with regard to board                   Company shall facilitate arrangements so that the General Meeting can vote for each of the board member candidates
remuneration. Board members may be included in a share option program (see section 3, last paragraph).                                  separately.

2. Purpose                                                                                                                              The Board and the Company’s auditor meet at the General Meeting. The Chairman of the Board opens the General Meeting. The
The Company’s purpose is to develop and market dermatological, cosmetic and other life science products by utilizing new                Board will propose an independent speaker to lead the General Meeting, if such is required to ensure appropriate completion of
technology and research results. This shall be obtained through own R&D and through cooperation with research institutions              the meeting.
domestically as well as internationally. The Company may also invest in other enterprises. The Company’s headquarter is
located in Bergen.                                                                                                                      7. Election committee
                                                                                                                                        Aqua Bio Technology ASA has established an election committee consisting of three members. The committee is elected by the
3. Capital and dividends                                                                                                                General Meeting for two years at a time and reelection is permitted. As of today, the election committee members are Nils Magne
Capital                                                                                                                                 Fjereide (leader), Tom Collet and Alexander Woxen.
Total capital in the Company December 31, 2008 amounted to MNOK 93.5, with an equity ratio of 79 %. Share capital increase in
connection with the listing on Oslo Axess in January 2008 and reduction in total capital as a consequence of the sale of the            The committee’s mandate is to propose alternatives for Board composition including proposal for Chairman and present proposal
consumer product division contributed to a marginal reduction in the equity position of the Company, even though the nominal            for remuneration of the Chairman and the other board members.
reduction of equity was MNOK 12.5 from 2007 to 2008.
                                                                                                                                        8. Board – Composition and independence
Before submission of the accounts, ABT’s Extraordinary General Meeting April 16, 2009 resolved a share capital increase.                The purpose of the Board’s activities is to optimize shareholder’s value and ensure equal treatment of all shareholders. When
Reference is made to the yearly report for further details.                                                                             electing new members of the board it is therefore important to have independent board members and board members
                                                                                                                                        representing different ownership interests. Board members are normally elected for a period of two years.
Authorization for share capital increase
In the Extraordinary General Meeting held April 16, 2009, the Board received two authorizations to implement share capital              At an Extraordinary General Meeting August 4, 2008 Kjeld Rimberg replaced Kjell H. Bakke as Chairman. Furthermore Mona
increases. A general authorization was issued to increase the share capital with up to NOK 5 718 076, which is valid for up to two      Møller had asked to be replaced, and Tone Bjørnov took her place on the Board. Other Board members are Kjetil Dahl, Bernt Th.
years from the time of registration in the Register of Business Enterprises. The authorization remains unused.                          Walther og Anne-Sofie Utne. At the Extraordinary General Meeting April 16, 2009 Thor Arne Talseth was elected Chairman of the
                                                                                                                                        Board in ABT and Kjeld Rimberg continued as board member, while Kjetil Dahl left the board.
The purpose of the authorization is to give the Board financial capability to complete transactions that may contribute to
strengthen the Company’s commercial position, equity or financial stability.                                                            The majority of board members are independent of the Company’s management and the Company’s major shareholders.

The above mentioned Extraordinary General Meeting in addition issued an authorization to establish an option scheme for the             9. Board activities
board members and management of the Company, limited upwards to 10 % of outstanding share capital or NOK 1 429 519. The                 According to Norwegian corporate law, the Board is responsible for the overall management of the Company, while the Managing
Board was authorized to resolve the details of the option scheme. The authorization is valid two years from the time of registration    director is responsible for the daily management.
in the Register of Business Enterprises.
                                                                                                                                        The Chairman shall in close cooperation with the Managing director follow the development of the Company, plan board meetings
4. Equal treatment of shareholders and related party transactions                                                                       and be responsible for ensuring that board members receive information required to perform their duties and obligations at a
The Board of Aqua Bio Technology ASA emphasizes equal treatment of the Company’s shareholders. This is achieved through                 satisfactory standard and quality, including adherence to applicable rules and regulations.
continuous information of Oslo Stock Exchange, the Company’s shareholders, financial institutions and the market in general
about the Company’s development, activities and events that may impact the share price. Aqua Bio Technology ASA has only                The Chairman chairs board meetings. The Managing director participates at the board meetings. Other members of the
one share class. The liquidity in the share is limited and the Company’s shares were listed on Oslo Axess January 10, 2008.             management normally participate to the extent it is required. During 2008 the Board held 14 meeting, incl. Board meetings held
                                                                                                                                        per conference call.
If the Board proposes that existing shareholders’ preferential rights shall be waived in connection with share capital increases, the
waiver will be grounded in the common interest of the Company and its shareholders.                                                     The Board has according to its guidelines a yearly plan for its work emphasizing goals, strategy and execution.

                                                                                                                                        10. Risk management and internal control routines



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ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA                                                                                                 ÅRSRAPPORT 2008 – AQUA BIO TECHNOLOGY ASA


The Board finds it important that the Company has sound control routines and an appropriate risk management system                        Presentation of the Election committee and the Board:
implemented. This includes: management of material business risk, execution of essential management control routines and
control of financial reporting as well as surveillance mechanisms. The Board will focus on securing sound internal processes
within these areas, which during a period have been down-prioritized in the light of the task of raising new share capital.               Election committee

Main risks include strategic risk, financing risk, liquidity risk and operational risk. The main risks are continuously assessed and as   Nils Magne Fjereide (53), is Managing Director and part owner of Misje Rederi AS and associated companies in Bergen. He has
a minimum once per year and are stated in the Company’s yearly financial report.                                                          a business degree and holds experience from management positions in Sparebanken Vest and Sparebanken NOR. Fjereide has
                                                                                                                                          had multiple board positions in companies within the sectors of finance and seafood, and is Chairman in Bolaks AS, which is one
11. Board remuneration                                                                                                                    of ABTs main shareholders.
The General Meeting decides the Board’s remuneration. No remuneration was paid during 2008, but NOK 506 000 has been
accounted for in the financial reports. Previous Chairman Kjell Bakke received NOK 212 282 in remuneration for his role as                Tom Collet (49), is partner in Connectum Capital Management AS in Oslo. He holds degrees in business management and
advisor for the Company. In addition he has an option to subscribe for 103 333 shares at NOK 7.20 per share. The option expires           financial analysis, and has extensive experience as financial advisor, trader and financial analyst within different business areas
May 14, 2012.                                                                                                                             and segments, in addition to board member experience.

Kjeld Rimberg has not been awarded options as Chairman. New Chairman as of April 16, 2009 has agreed the framework of an                  Alexander Woxen (35), is investment director (private equity) in Katalysator AS in Oslo. He holds a degree in business
option agreement. The new Chairman will in addition be hired as COO for a period, and employment conditions are tied to the               administration and was formerly partner and founder of an investment fund with focus on venture capital for companies within
Company’s performance and cash flow (ref. note 21 in the yearly report). No board members have otherwise received options in              technology and industry segment. He holds several board positions within finance, commerce and industry.
the Company.

12. Remuneration for senior management                                                                                                    Styret
Separate guidelines have been issued for the Managing Director. His responsibilities and tasks are also described in the
Company’s guidelines for the Board. The Board stipulates the Managing Director’s remuneration.                                            Thor Arne Talseth (39), Chairman. Mr. Thor A Talseth has a degree from Trondheim Business School (TØH). In addition to being
                                                                                                                                          Chairman, Mr Talseth is employed as COO (80%) and has the operational responsibility of commercializing the products of ABT. He has
The Company’s senior management is given a fixed salary reflecting the employee’s education, experience, qualifications and               broad experience from top management and as CFO in various industries and the finance sector. Most recently Mr. Talseth was as Managing
responsibility. It is important that the remuneration level makes it possible to attract the best qualified to the leading positions      Director in Landsbanki Norway. Prior to Landsbanki Mr Talseth was CFO in the telecom company Catch Communication ASA listed on Oslo
within the Company.                                                                                                                       Stock Exchange. Talseth resides in Oslo.


The Company covers senior management’s telephone and mobile telephone expenses. Senior management is covered by the                       Tone Bjørnov (47), Board Member. Mrs. Bjørnov holds a degree in business administration from the Norwegian School of Management
Company’s obligatory pension scheme on equal terms as the other employees. Two of the Company’s leading employees were                    (BI). She had a long career with DnB NOR where she held several management positions. She is currently partner in the finance consultancy
awarded options during 2008. Ståle Bergum and Dag Oskar Oppen Berntsen were awarded options to subscribe for 150 000                      company ValutaCorp AS and a board member of several Norwegian companies, including GGS ASA, Bank1 AS and Spectrum ASA. Bjørnov
shares each, at a par value of NOK 0.20. The exercise period of the options is up to 48 months. 50 % of the options can be                resides in Oslo.
exercised as of January 1, 2010, while the remaining options can be exercised as of January 1, 2011. Each option gives the right
to subscribe for one share at the price of NOK 9.90 per share. The options can only be exercised if the holder is an employee of          Kjeld Rimberg (66), Board Member. MSc in civil engineering from the University Of Trondheim, with minors in macro economics and urban
the Company at the time of exercise.                                                                                                      planning. Rimberg has wide experience from top management positions within different fields of business, coaching and consultancy work, in
                                                                                                                                          addition extensive experience as Chairman and board member for companies within Industry and Technology sector. Rimberg owns and
13. Information and communication                                                                                                         manages a consultancy company (Kjeld Rimberg Consulting AS). Rimberg resides in Oslo.
Aqua Bio Technology ASA seeks to maintain an open policy of information towards its shareholders, media and other interested
parties, within the frameworks set out by the securities act, accounting act and stock exchange rules and regulations. The                Bernt Theodor Walther (64), Board Member. Mr. Bernt Theodor Walther obtained a PhD in Biochemistry from the University of
Company has its own home page (www.aquabiotechnology.com) containing investor relation information and other information                  Washington, US after studying medicine at the Univ. of Oslo. Dr. Walther is employed by the company as Head of R&D (20 %), serving as
useful in understanding the Group’s development and activities. The home pages are under continuous development. The                      ABT's general scientific advisor. He has been essential in the research leading to the development of Zonase. Walther is reknowned
Chairman, Managing Director and Chief Financial Officer may speak on behalf of the Company.                                               academically, and has an extensive international network. Walther is the sole owner of Zym Holding AS which holds ownership in the
                                                                                                                                          Company. Walther resides in Bergen.
14. Acquisition
The Board will not seek to influence, hinder or impede an offer for the purchase of the Company’s assets or shares, or hinder the         Anne Sofie Utne (48), Board Member. Mrs. Utne holds a Master of Economy from the Norwegian University of Life Science (Universitetet
execution of such a transaction. If an offer for the Company’s shares is made, the Board will issue a statement with its evaluation       for Miljø- og Biovitenskap). Mrs. Utne is currently employed in Kauna Management AS as managing director (100 percent shareholder of the
of the offer, or give its reason for not issuing such a statement.                                                                        company) and works as an independent advisor. Her recent position was head of the Aquaculture department of a branch specialist unit in
                                                                                                                                          DnB NOR Bank ASA, and she has extensive experience in financial transactions related to national and international corporations within the
15. Auditor                                                                                                                               business (8 years). Mrs. Utne is currently also a Board Member of Nordlaks Produkter AS, Nordlaks Oppdrett AS, Smolten AS and Seaborn
The Company’s auditor presents an annual plan for his work to the Board and participates in the Board meeting approving the               AS (companies within the aquaculture sector). Utne resides in Oslo.
annual financial accounts. The auditor otherwise completes the tasks and activities required by him according to law and
guidelines for good auditing practice. The Board has authorized the management, to a certain extent, to utilize the auditor for
other tasks than auditing. This may be the case in complicated matters related to taxation and mergers/acquisition. The Board is
of the opinion that such consultancy work does not influence the auditor’s status as independent of the Company.




                                                                                                                            55                                                                                                                                           56
AQUA BIO TECHNOLOGY ASA
      C Sundts gate 51
  N – 5004 Bergen, Norway

  Telephone +47 55 55 07 73
     Fax +47 55 32 80 16




     VENTURELAB AS
     Haakon VIIs gate 9
   N – 0161 Oslo, Norway

  Telephone +47 21 01 85 30
     Fax +47 21 01 85 31