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Interim report and financial statements for the first quarter 2010

Advancements in opening new markets

(PresseBox) (Linköping, ) .
- Several new toys and game concepts which use Thinfilm Memory(TM) are under development
- The new Thinfilm Memory Controller will open new markets and further increase Thinfilm Memory's leadership in cost efficiency
- The work on the next generation of higher density printed memories has started During the quarter, Thin Film Electronics ASA ("Thinfilm") has further increased its market activities. At present, ThinfilmMemory(TM) production is now ready to move from pilot to commercial volumes. Furthermore, the Company is designing an inexpensive Thinfilm Memory Controller, and has started development of the next generation of higher density printed memories.

Thinfilm has increased its market activities in 2010.These additional efforts have mainly targeted inventors and manufacturers of toys and games, where Thinfilm sees significant nearterm commercial prospects. "We experience a high degree of interest from this audience, and we have now reached a point where several new toys and game concepts which use ThinfilmMemory are under development," says Rolf Åberg, CEO of Thinfilm.

Last year,Thinfilm was the first in the world to produce polymer memories at large scale using rolltoroll printing. Over the last months, Thinfilm has made further progress together with its partners inmoving from pilot to regular production.

Thinfilm is designing a new lowcost memory reader and writer. "The Thinfilm Memory Controller will open new markets and enable a broader range of applications for our technology,"

Åberg continues, and explains that the memory controller will further increase the cost leadership of Thinfilm's printed memory compared to alternatives, such as magnetic cards and flash, on a perchip/perdevice basis. It will also smooth the integration of the ThinfilmMemory into game designs, and hence ensure shorter timetomarket for memoryenhanced games.

Furthermore, it enables new standalone handheld toy designs, and also provides a lowcost and smallfootprint reader/writer technology platform for applications in other industries.

Thinfilm has started the work on higher density printed memories. The next generation of memories currently under development will increase memory capacity with small changes in layout.

Higherdensity printed memories are expected to be coupled with printed primary batteries, sensors and displays, creating disposable packaging and status indicator elements. Very promising research and development is carried out in the field of printed electronics, and many types of electronic components can today be printed. "To integrate them in fully printed electronic systems still needs some breakthroughs, not least on printed transistors," says Åberg.

About Thinfilm and printed electronics: Thin Film Electronics ASA ("Thinfilm") is focused on providing lowpower, nonvolatile, rewritable polymer memory technology and products in the rapidly growing market of Printed Electronics. Thinfilm's current main product offering is a 20bit nonvolatile rewriteable memory printed in a highvolume rolltoroll process.

Printed electronics is still in its early stages, and according to industry analyst group IDTechEx, is expected to grow to more than USD 50 billion in market value over the next ten years.

IDTechEx predicts that logic (i.e., memory and transistors) will be the largest segment in this market, representing more than 30 per cent of the total.

Using printing to manufacture electronic memory makes it possible to reduce the number of process steps, dramatically reduce manufacturing costs, as well as the environmental impact as compared to traditional semiconductor processes. Commercial applications of printed electronics include epaper electronic readers and organic light emitting (OLED) displays. Sensors, batteries, and photovoltaic energy sources are also in development, and together with Thinfilm's memory technology they will open the door to new products and applications.

Memory is an essential part of most electronics. Memory is required for identification, tracking status and history, and is used whenever information is stored. Thinfilm's nonvolatile ferroelectric polymer memory technology is well suited for application with other printed electronics devices because the power consumption during read and write is negligible, and during standby, no connection to external power is required. Data is retained without power consumption and the electric current required to write information is so small that operation using a standard battery would last years, and likely be limited by the battery's lifetime and not its original amount of power.

Other events in 2010
- On 7 January 2010 Thinfilm further strengthened its management team when Davor Sutija joined Thinfilm as Executive Vice President, Business Development and Marketing.
- Geir Harald Aase joined Thinfilm on 7 April 2010 to become Vice President of Communications and Investor Relations.
- An updated company presentation was released on 8 April 2010.
- Thinfilm attended the Engage & New York Toy Show, 16-18 February 2010.
- Thinfilmgave a master class lecture and exhibited at thePrinted Electronics Europe 2009 conference12-14April 2010.Approximately 900 people attended the conference in Dresden, making it the biggest event on the topic in Europe.
- A new and updated web site was launched, at www.thinfilm.no, in January.

Condensed consolidated financial report as at 31 March 2010

Thinfilm's revenue in the first quarter was less than NOK 0.1 million and related to administrative services. In the first quarter of 2009, similar revenue amounted to NOK 0.3 million.

Other operating costs (i.e. all operating costs excluding depreciation and impairment charge) in the quarter were NOK 6.2 million, including the notional cost of subscription rights (share based compensation) of NOK 1.1 million. The corresponding numbers for the first quarter of 2009 were NOK 5.6 million and NOK 0.3 million. Excluding share based remuneration, costs are slightly lower than the same period in 2009 but higher than in the fourth quarter of 2009. This is due to the increase in sales and marketing manning and activities. There were five fulltime employees in the group at the end of the quarter, and in addition Thinfilm made use of outsourced services and specialist contractors. Depreciation is negligible because all costs related to equipment and intangible assets have been expensed. Going forward, costs will vary with manning and activity level.

Net financial items, mainly exchange gains/losses related to variations in SEK, amounted to a loss of less than NOK 0.1 million in the quarter, compared to a gain of NOK 0.5 million in the same period of 2009. Interest income is insignificant at the current rates.

The company operates at a loss and there is a tax loss carry forward position also in the Swedish subsidiary, such that the group has not incurred any tax costs in 2010 or the year before. The company has not recognised the deferred tax asset in its balance sheet, because this potential asset does not yet qualify for inclusion.

The net result in the first quarter was a loss of NOK 6.2 million, corresponding to a loss of NOK 0.04 per basic share. In the first quarter of 2009, the loss amounted to NOK 4.8 million corresponding to NOK 0.22 per basic share.

The group's cash balance decreased by NOK 5.0 million in the quarter, reflecting the payable costs. The cash balance on 31 March 2010 amounted to NOK 4.8 million. The available liquidity is deemed to be adequate until the warrants exercise period in the second quarter of 2010.


It is the duty of the board to point out that until Thinfilm earns recurring revenue, and the printed electronics markets have evolved further, there is inherent uncertainty attached to Thinfilm's business.

Thinfilm foresees a developing shift towards ubiquitous memory where people and devices can store and retrieve information through portable devices and communicate both with external (e.g., cloudbased) data sources, and also with memoryenabled objects and sensors in their surroundings. This is our Memory Everywhere(TM) vision.

Thinfilm's business development activitieswill keep focusingonthe toys and games market.

Development of next generation printed electronics products, combining printed memory with other technologies such as transistors, sensors, and displays, will also be pursued.

Thinfilm'stechnology staff will continue to provide technical presales support, and aid commercialization efforts with manufacturing partners. Thinfilm will also work directly with toy and game inventors to integrate printed memory into specific designs. Development of next generation products is also on the R&D agenda.

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